Well, that didn’t take long. Just a few days after Boris Johnson’s thumping majority sent sterling up to pre-referendum highs, his flirtation with a no-deal exit brought it back down to earth yesterday.
But are the markets (heaven forbid) missing something? The government is embarking on its ‘first 100 days strategy’ — using political capital to put down markers, unveil a big agenda and generally give the appearance that it’s getting on with things while the opposition continues to lick its wounds. We’ve been promised, for example, a new bill enshrining in law annual cash increases for the NHS. This sort of constitutional gimmickry is pure Blairism. That is to say, it’s big on presentation and light on substance. If the government can pass such a law, it can easily repeal it should it need to.
Furthermore, a law is not required in order to keep on pumping money into the NHS. In other words, it is political showmanship — and the same applies to the promised law ruling out an extension of trade talks with the EU beyond the end of next year. If the government ran out of time but really didn’t want to leave without a deal, does anyone suppose it will feel bound by its own law? That too is to say nothing of the continuing hostility in the EU to a no-deal exit. Neither side wants it, so each shall work to avoid it.
But there is another, more interesting dynamic to Johnson’s commitment to getting a trade deal done in record time: he might just achieve it. EU leaders have recognised with admirable speed that Johnson’s win changes the nature of the negotiations. This isn’t to suggest that it gives the UK the upper hand (it doesn’t) but it does make things clearer. Even Guy Verhofstadt, who has spent the last few years trolling Brexiters, said after last week’s election: “The EU must now focus on building a new close, fair and lasting partnership with Britain,” adding, “it is in our common interest.”
The talks will be hard, but the hardest parts can be shunted past Johnson’s deadline and, as more and more EU leaders appear to recognise, a bare bones trade agreement could indeed be negotiated (and hailed by all sides) by the end of next year. The cliff edge is unlikely to loom.