Tuesday 26 February 2019

Yanis Varoufakis today is very insightful


A bad Brexit deal, and even more so a no-deal Brexit, will be detrimental to the UK and to the EU. Mrs Merkel, Mr Macron and Mr Juncker are just as aware of this as Mrs May. If Article 50 had not stipulated a fixed deadline, the EU’s leadership would have no option but to negotiate in good faith until they struck a mutually advantageous deal with the British government.

Nevertheless, the fixed deadline meant that, despite the large costs to continental manufacturers from a tumultuous Brexit, the EU lacked any strategic incentive to negotiate in good faith. Given that the negotiation’s last possible moment was common knowledge, and a no deal would impose higher costs on the UK than the EU, no authentic negotiations were ever on the cards – an obvious deduction which was the reason why, since the summer of 2016, I have been warning the UK against participating in Brussels’ phoney negotiation ritual. 

When Brussels and London know that N days are left and that, on day N, London is facing a costlier default, Brussels has no incentive whatsoever to make meaningful concessions until day N. Whatever concessions Brussels makes before day N, London will expect more concessions on day N – which prohibits Brussels from making concessions before day N! Meanwhile, as day N approaches, the British side is beset by increasing divisions that give Brussels even greater cause to toughen its stance. Moreover, the above holds independently of whether N is 30 days, 300 days or 3,000 days.

Yanis Varoufakis today in the Daily Telegraph. He thinks only leaving with no deal or Mr Corbyn's proposal of staying in the EU Customs Union make sense. What about Norway or Canada?

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