Hold the Brexit Champagne

British Prime Minister Boris Johnson looks ever more likely to succeed in getting parliamentary approval for his Brexit deal.

If he does so, he will have succeeded where Theresa May failed so miserably. And he will have put himself in a strong position to win an early election by a wide margin. He also will have spared his country and the global economy from the devastating economic consequences of having the UK crash out of Europe without a deal.

But before getting the champagne ready, one might want to reflect on the fact that the approval of any Brexit withdrawal deal would only be the prelude to the long negotiations that lie ahead on the UK’s future relationship with the European Union. One also might want to reflect on both the long-run political and economic costs to his country of the compromises that Johnson has had to make to have gotten his Brexit deal done. 

Boris Johnson’s narrow defeat in parliament on Saturday has certainly delayed his efforts to get his Brexit plan over the line by the end of October. But it has not permanently put an end to that goal.

In fact, all that Johnson need do is to change the minds of nine parliamentarians to get his Brexit plan finally approved. This seems to be well within reach considering that more than a sufficient number of parliamentarians have indicated that they would be prepared to vote for his plan after the enabling legislation has been passed by parliament.

Johnson is succeeding where May failed because of two important concessions that he made to the hardline Brexit proponents on his government’s back benches. 

The first of these compromises was to cross his redline of not accepting the different treatment of Northern Ireland from the rest of the United Kingdom in any Brexit deal. By now accepting that the border between Europe and Great Britain will be in the Irish Sea, and that for practical purposes Northern Ireland will remain in the European Single Market, he has succeeded in getting Europe to drop the so-called Irish backstop as a condition for a Brexit deal. That Irish backstop had stuck in the throats of many Conservative Party members who saw it as a devious means by the Europeans to keep the United Kingdom indefinitely locked in Europe’s customs union.

The second major concession was to give clearer definition to the United Kingdom’s final destination with Europe in the next stage of the Brexit negotiations. He has now committed himself to seeking only a loose free trade agreement with Europe on the model of the Canadian-European Free Trade Agreement rather than seeking any close customs union-style arrangement. 

These compromises will likely prove to be sufficient in getting the United Kingdom out of Europe in an orderly manner by the end of October. But they will have done so at considerable long-term political and economic cost to the United Kingdom. 

By effectively having thrown Northern Ireland under the bus by having it treated differently than the rest of the United Kingdom, Johnson is bound to have given impetus to calls for a second referendum on Scottish independence from the United Kingdom. Scotland, which voted overwhelmingly to remain in Europe, will almost certainly ask why, like Northern Ireland, it cannot remain in the European Single Market.

Johnson’s commitment to seek a looser economic relationship with Europe is also likely to have long run economic costs to the United Kingdom. Indeed, the government itself has estimated that a free trade agreement along the lines being proposed by Johnson would likely cost the UK almost 7 percent in lost GDP over a 15-year period.

On a more positive note, should Johnson eventually get approval for his flawed Brexit deal, he will have spared both his country and the world from the devastating economic consequences of having the UK crash out of Europe without a deal. He would also have set himself up for a landslide victory in any early UK parliamentary election. That, in turn, will have spared the United Kingdom from a return to the failed economic policies of the 1960s under the far-left leadership of Jeremy Corbyn.

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.