The Sick Man of Europe: Can Theresa May Save the UK?

These days the British rule with two queens but they are still quite sick. Of course, the ills of their country are almost exclusively related to Brexit – a meaningless word not long ago. “Change is in the air” and the Brexit queen Theresa May is keen to do “new business with old allies” and build bridges outside the EU. But as Deloitte’s leaked memo shows there is no overall official plan for Brexit and ministers are deeply divided on how to proceed. The government has disowned the “unsolicited” document which warns that Whitehall could need 30,000 extra staff because it is working on 500 Brexit-related projects. Earlier analysis suggested that “in her quiet but deadly way Mrs May has been the most ruthless player of them all”. But when the vicar’s daughter spoke at her party’s conference her message was so unpalatable that even Brexiters were alarmed by its contents. Similarly, her “maternity tourism” comments, which flow from her intention to deny pregnant women access to hospitals unless they pay, closely identify with the caustic style of Donald Trump who thinks that most Mexicans are rapists and drug dealers and so Mexico must pay for a wall to protect the United States. Since citizenship has become the dividing line between good and evil, she interprets his victory as a sign to redouble the need to control immigration.

The home secretary Amber Rudd might even devise methods to racially profile all foreign workers in the UK and name and shame businesses relying on foreign labour. Steve Hilton, who advised David Cameron in the past but supported Brexit, attacked the government for using vitriol “worse” than Trump’s war on Islam. Drawing clear parallels to Nazi concentration camps, Hilton scandalised the government’s plans. Mocking Rudd at the cost of demeaning Holocaust victims he said: “Hey Amber, for your next brainwave why not announce that foreign workers will have numbers tattooed to their forearms.” Question marks also hang over Rudd’s directorship of two offshore firms in the Bahamas. “Margaret Thatcher’s revenge” is how Professor Vernon Bogdanor describes Brexit. Cameron’s teacher who found him to be “very confused”, Bogdanor warned May that short timescales mean that leaving will be easy but getting a trade deal will be hard and delay will mean that the most vulnerable in British society will suffer the full force of globalisation.

Thatcher’s biographer Charles Moore, a leading proponent of withdrawing expeditiously, is keen to limit the damage caused by hard Brexit. For example, ahead of the Conservative conference he took a “we can afford to be generous” view of the future. He cautioned the party not to overreact and advocated offering tariff free trade to Europe and residency rights to EU citizens already here because “it’s in our interests”. Yet soon afterwards Moore lamented that the prime minister’s wayward conference rhetoric failed to focus on freedom. He insisted that to control immigration was one thing but that to “encourage such an attitude to foreigners that they no longer want to come here is another.” It is said he is part of “a new set of alliances” that want “to fight the hard Brexiters” and are aiming for “a soft landing”. As is now apparent, even Boris Johnson was a secret remain supporter and wrote that he was worried about the economic shock of leaving, Scottish independence and exposure to risk from Russia. He thus wanted to “back” David Cameron’s deal with the EU and argued that loss of sovereignty to EU law was a price worth paying. As he put it, Bremaining would be “a boon for the rest of the world and for Europe”. Since taking up his role as foreign secretary, Boris has also disclosed that he “supports freedom of movement” which directly contradicts his earlier stance.

Prime minister May, who has hypocritically reinvented herself on the leave platform, announced she will trigger Article 50 by March 2017 and the UK will leave the EU by April 2019. Inexorably, this is her position irrespective of what the courts say. President-elect Trump and her are quite likely to get along on their shared views on Brexit because, unlike his predecessor, he does not think that the UK is at “at the back of the queue”. She may have been the tenth leader on his call list – ranking below Ireland’s Enda Kenny – but he did spontaneously invite her over to Trump Tower by saying “if you travel to the US you should let me know”. We can only wonder whether she will feel safe negotiating with him alone? Nigel Farage enjoys a special demonic poodle status with Trump but Downing Street has dismissed the idea that he could act as a “third person” and leverage the special relationship with Washington. William Hague, who strikes one as being a dove and not a hawk, stresses the importance of Europe and America standing together to prevent the west’s fall but he rules out Nigel Farage playing any part in persuading Trump to maintain America’s longstanding alliance with Britain.

Immediately after the referendum, Martin Wolf humoured us by recalling the tale of the man condemned to death who said to the King: “I could teach your horse to sing within a year”. The king replied: “Very well. But if the horse is not singing in a year from now you will be executed. Upon returning to his cell his cellmate exclaimed: “You know you can’t teach that horse to sing.” But the condemned man very cleverly replied:

I have a year I didn’t have before. A lot of things can happen in a year. The king might die. The horse might die. I might die. And who knows? Maybe the horse will sing.

Wolf’s criticism was targeted at the leavers. “They cannot have their cake and eat it,” he protested some months ago. The prime minister does not deny that her government is facing “huge challenges” because of Brexit; the resultant stress keeps her awake at night, she admits and as a good Christian she trusts God to steer the UK’s out of the wretched EU. However, May is determined not to concede anything on freedom of movement, rejects the CJEU’s jurisdiction, dictatorially wants to leave the single market without letting MPs vote, but says she might do a quid pro quo on letting EU nationals in the UK have their legal rights if UK nationals in EU states receive the same treatment. But her troubles will crystallise even if only a handful of her own MPs revolt against her. Many MPs are already threatening to vote against on triggering article 50.

Equally, people on the losing remain side have still not given up hope. For example, Nick Clegg thinks that Trump’s election offers May to build a stronger and safer Europe. His view is that “when it comes to foreign policy and defence, Donald Trump should prompt ‘more Europe’ not less.” May says that the idea of the second referendum insults the British people’s intelligence but many of her own party members are demanding a second referendum regarding the exact terms of Brexit. She also proclaimed that Parliament is not entitled to vote on Brexit because second-guessing the electorate would be unacceptable. But the “enemies of the people” thought otherwise. Will the Supreme Court hold otherwise and save her? Or will judicial activism and interference make Brexit impossible?

Ironically, with potential annual costs of £66bn to the exchequer, outright British independence will not come cheap. A recent ComRes poll says that the majority (49%) of the public wants to give priority to an advantageous trade deal whereas the minority (39%) has made immigration its core focus. Overall, however, Moore nevertheless applauded May’s tactics but simultaneously complained that her vision suffered from “a blind spot”. The short timescales governing the exercise mean that the UK may experience “the most ‘extreme’ version of Brexit”. Concomitantly, Nicola Sturgeon renewed her pledge that Scotland will become a separate country. May and Sturgeon – who may well be the third queen in the equation – are also being compared to Elizabeth I and Mary, Queen of Scots, with the result that “their political objectives are so incompatible they cannot coexist in perpetuity.”

Modernisers formerly in ministerial roles such as Anna Soubry and Nicky Morgan liken May’s tyrannical regime to North Korea where dissent is immediately crushed. Where does all this leave the good people who voted to remain? The 48.1% are now being held hostage by the 51.9% under the principle of the dictatorship of the simple majority. Dwindling tax revenues and poor economic prospects are likely to arise because of switching from the single market to WTO rules. Soubry argues that the “horrific damage of a hard Brexit” will result in fewer schools, hospitals, jobs and business opportunities. She is concerned that the country has “lost the plot” and posits “people need to look at the Borises, the Goves, the Carswells, and the Farages of this world, who have led them down the garden path.” May has also been accused of “dictatorship” by Philip Johnston who thinks her approach is “wrong and dangerous” because the country is divided and needs to unite to survive and move forward. Johnston, who voted to leave, was unable to understand why Parliament should not be able to vote on the most important issue to confront the country in six decades. Emotions are running at an all time high these days. Indeed, many Tory insiders  as Stephen Phillips MP, who voted to leave, are disgruntled with May’s high-handed tactics. He  eventually quit the party because of “irreconcilable differences” with the prime minister because of her desire to oust Parliament from making a decision about invoking article 50.

“Wholly unacceptable” is how Andrew Tyrie MP – the architect of ongoing reform in the finance sector and the conservative chairman of the Treasury Select Committee – described May’s secretive negotiating strategy. For him, the people need to learn the truth transparently from their own government rather than from information leaked by European counterparts. The same language was used by the shadow Brexit secretary Kier Starmer to denounce the circumvention of proper debate about the exact terms of Brexit in Parliament. But of course upstarts like the international development secretary Priti Patel liken Brexit negotiations to playing poker. Such a secretive and opaque strategy is completely irreconcilable with May’s quest for a “smooth” Brexit.

The former attorney general, Dominic Grieve QC is concerned that precluding Parliament’s support for a deal will put the government at a high risk of failure and may trigger a general election. Economic ills aside, he calls Brexit a “legal nightmare” and highlights the importance of the established convention that Parliament must approve major treaty changes as opposed to the executive relying on the prerogative.

When the new chancellor Philip Hammond, a low-key fiscal hawk known to his colleagues as “spreadsheet Phil”, threw his support behind her, he said: “I trust Theresa”, and of course invited the public to do the same. Hammond also stressed that she will toil “tirelessly” to control immigration and the UK “must trade off free movement and business”. (With record net migration of 333,000 in 2015, she failed most miserably in cutting the numbers; which have only increased since the referendum.) For such loyalty she promoted him to chancellor, sacking George Osborne because of the earlier clashes the pair had in cabinet over visas.

Despite May pounding home the message about her future intentions about reforming capitalism and stopping unethical business practices, Hammond tried to pacify the world of banking and finance by offering an olive branch to the world’s “financial elite”. He said to senior bankers in New York that there would be a special deal for the financial services sector. Some suggestions of an exclusive entitlement to free movement of workers in financial services have also been reported. The City, which is suffering from Brexit jitters, has been pleading for an open immigration policy so that the talent pool can remain wide and access to skills is not impeded. However, a secret memo reportedly suggests that the the UK will not remain in the single market. Instead, it will seek a “Canada plus” deal but securing agreement on services will be “difficult”.

For the chancellor, access to the single market is as important as limiting free movement. He has warned that GDP could shrink by 4% because of the Brexit rollercoaster. Hammond, for whom the vote was not a free hand to destroy the economy, is accused of “relentless pessimism” and has been advised by cabinet colleagues to “watch his back” or risk losing his job. But in response a Treasury official fired a warning shot and said: “Liam is the one who needs to watch his back. Of him and Philip Hammond, I know which is more sackable, and it’s not the chancellor.”

Hammond says that the electorate did not vote “to become poorer or less secure.” More than half of UK exports are destined for the EU. David Davis claims that barrier free trade is “as good as the single market.” Boris Johnson is confident that the country can get liberated and “champion free trade around the world.” The international trade secretary Liam Fox, who even wants to exit from the customs union, thinks that the public voted to end “uncontrolled migration” and “we have to accept that”. However, according to a study by NIESR, leaving the customs union will clog UK ports and trigger a 4.5% decline in GDP by 2030 which will only be bridged if the UK is able to boost trade by 37% with its 10 largest non-EU partners by 2030.

The cabinet is divided and anonymous ministers are attacking the chancellor for being clouded by “a very Treasury point of view” and chastise him for “arguing like an accountant seeing the risk of everything rather than the opportunity.” These comments seemed to have been sparked by Hammond’s intransigence to Amber Rudd’s plans to impose requirements on EU workers to demonstrate that they have a skilled job prior to being allowed into the UK. However, Downing Street has been angered by suggestions that Hammond and May are in disagreement and “the prime minister has full confidence in the chancellor and the work he is doing.”

With a £100bn budget hole in finances it is expected that Hammond, who has ditched his predecessor’s fiscal surplus plan until the 2020s, will not make wholesale changes to the tax regime in his first Autumn Statement. He will hold back on hitting the rich until the budget next spring despite May’s pledge to reform venal tendencies in business circles. The chancellor explains that “we need to boost the economy before Brexit” and that his Autumn Statement will “develop the infrastructure and skills” to make things happen for the working class. He thinks that the UK has “a great head start” but that it needs to “step up a gear” in order to deal with the economic uncertainty that lurks behind the “bold decision” to leave the EU. The uncertainty is such that it leaves the UK facing “eye-watering debt”. For him the answer is high productivity and he welcomes Google’s decision to invest a further £1bn in the UK and create 3,000 new jobs. He informs us that in the coming weeks the government “will publish a modern industrial strategy for the 21st century to tackle the weaknesses and build on the strengths of UK Plc as we enter the Fourth Industrial Revolution.” (In the Autumn Statement he said that he would be borrowing £122bn more than forecast in March and that £59bn of this was due to Brexit.)

Of course, May is also busy trying to hand an olive branch to businesses. Amid claims that she is ambivalent towards business interests, she purports to subscribe to an “unashamedly pro-business” agenda. Notably, her newfound alliance with the business sector comes at the cost of ditching her grand plans to place workers on company boards and curtailing executive pay. “A once in a generation chance to shape a new future,” is how she describes the opportunities thrown up by leaving the EU; but she nevertheless argued in her CBI speech that Brexit is a wake up call and that public trust in business is at an all time low.

The Brexit bunch view Hammond’s presence in cabinet as a hindrance and dislike him for balancing political choices with economic consequences. But Hammond is standing his ground and says he has made it “absolutely clear” to May that he will not stand down. He defends allegations of “undermining” the vote. But he has locked horns with May over student visas and believes that students should not even be included in net migration statistics. While examining Hammond as a witness on 19 October 2016 Andrew Tyrie MP said that he agreed with a relaxed policy on student migration and remarked that even Enoch Powell expressly excluded students from his restrictive vision of immigration in the Rivers of Blood speech.

The loss of passporting rights by Brexit will be a serious hit to the City. EU single market directives lay down “passportable” activities. As amended, the Financial Services and Markets Act 2000 (FSMA) refers to an EEA right whose exercise is known as “passporting”. Subject to satisfying the requirements under the relevant single market directive, a firm authorised in an EEA state is entitled to carry on permitted activities in any other EEA state by either exercising the right of establishment (of a branch and/or agents) or providing cross-border services. Passporting is either “outward” or “inward”.

The Financial Services Act 2012 abolished the crumbling Financial Services Authority and created the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). The two new regulators act collaboratively. The PRA is the principal lead regulator for outward passports for dual-regulated firms in relation to a suite of single market directives. Among other things, it assesses notifications pursuant to:

Inward passporting is when an EEA state firm can passport into another EEA state on the basis of “services” (without a physical presence) or a “branch” (with an office). The firm will be supervised by a regulator in its home state in most cases and in the UK the PRA and FCA act collaboratively and the former agency is the lead regulator in relation to the Capital Requirements Directive and Solvency II Directive.

Put simply, EU passports permit banks and financial firms to conduct business by operating in all the member states without obtaining individual regulatory approval for accessing the market of each state. The head of Germany’s central Bundesbank, Jens Weidmann, has warned that leaving the EEA will result in the loss of passporting rights – which would “automatically cease” if Brexit is “hard” – for the UK. However, the ratings agency Moody’s thinks the UK will be survive and cope without passporting. Nothing of substance exists to support Moody’s hunches because all the big banks – Barclays, Citibank, Lloyds, RBS, HSBC, Standard Chartered, JP Morgan, Goldman Sachs and a total of 5,500 firms – rely on outward passporting to operate their businesses. (Notably, it was also Moody’s which downgraded UK’s debt rating from “stable” to “negative” after the referendum.)

Of course, the EU has something to lose as well because 8,000 firms registered in other EU locations also passport into the UK. A study by Politeia – bankrolled by Boris Johnson, Liam Fox and Michael Gove – is adamant that the City would be better off without the “excessive” EU rules and a clean break by way of Brexit would create the space for the UK to reinvent itself and achieve more efficient regulation. Similarly, Jes Staley, the new American CEO of Barclays thinks that London will not lose its “gravitational pull” as a hub for global financial markets because of Brexit. (Perhaps Staley’s punditry is better directed at addressing his bank’s extraordinary record for scam related complaints which massively outstretches every other bank’s fraud related problems.)

Nevertheless, European capitals are rolling out the red carpet to attract businesses fleeing London, which is no longer considered “cool” in the world of finance, and Amsterdam, Dublin, Frankfurt, Luxembourg, Madrid and Paris are hoping to capitalise on the fall out. The Financial Times claims that the influx of bankers to London has also been halted by the vote. The leading Russian bank VTB announced not long ago that it intends to move its investment bank headquartered in London out of the UK because of Brexit disruption. The bank wanted to expand its London operations but will now move the office elsewhere as it believes that Brexit will be a slow process.

It is also being argued that the exodus from the City is already underway and as a financial hub London is under challenge from European capitals; which suffered in the past for their intransigence to English. With the pound on the deathbed, the prime minister softened her tone and said that access to the single market was a priority for the government. Oliver Wyman’s research for CityUK estimated that soft Brexit would cost 4,000 jobs whereas a hard Brexit would result in the loss of 70,000 jobs. Unsurprisingly, the head of Morgan Stanley International Rob Rooney has pointed out:

If we are outside the EU and don’t have what would be a stable long-term commitment to the access the single market, then a lot of the things we do in London, we’d have to do inside the EU 27.

Equally, as the CEO of the PRA Sam Woods explained to Parliament earlier this year:

Running a leading global financial centre and a massive banking system with a set of rules over which you have no influence is not something you would easily choose to do.

His predecessor Andrew Bailey, who is now the CEO of the FCA and “deliberately” timed his arrival at the City watchdog to coincide with Brexit, makes no secret of the fact that the banks are looking to relocate in the event of a hard Brexit. Bailey, whose first job was as a research assistant at the London School of Economics, admits that they have not left yet but fears that “something has to push them out and that could happen quite clearly.” Nonetheless, not everyone agrees that unwieldy EU regulation is beneficial for the UK. Historically against the UK’s involvement with the EU, Dr Mark Carney’s predecessor Professor the Lord Mervyn King has argued: why on earth would you want to be part of tennis club if you loathed the game completely and only ever played bridge? But even for him, short-run damage and shocks to the UK will be an avoidable consequence of exiting the EU.

May’s initial silence, i.e. her refusal to provide a “running commentary”, over her strategy led a string of commentators to argue that leaving the EU would yield a “Brexit Dividend” but when she disclosed her intentions the pound fell sharply in an unprecedented “flash crash”. Leaving the single market makes the pound less attractive. Indeed, this analysis is fortified by  the spike in the pound triggered by news that David Davis has indicated that the UK could pay EU for single market access after Brexit.

United by events, EU leaders such as Angela Merkel and Francois Hollande are adamant that Germany and France will side with the EU no matter what. The French president stresses that the UK must “pay a price” for leaving and German officials have warned that they will choose the EU 27 over the UK if forced to do so. Even Denmark, a natural British ally, is taking a hard line on Brexit by putting its national interests and the interests of the EU first. Copenhagen does not want to “lose out” by helping the UK.

Just the other day, the German finance minister Wolfgang Schäuble set out a grim vision for the future by suggesting that the UK would need to keep paying its bill for more than decade after splitting up with the EU. Dashing May’s hopes that Germany would help the UK in scaling down French demands, he said: “Also we cannot grant any generous rebates.” He also added that no compromise would be made on freedom of movement. “There is no à la carte menu. There is only the whole menu or none,” he said. Using “golden visa” routes in EU countries is the future price that many British people might have to pay to protect themselves from the fall out from the end of freedom of movement. Similarly, a leading EU diplomat said to the Observer:

If you British are not prepared to compromise on free movement, the only way to deal with Brexit is hard Brexit. Otherwise we would be seen to be giving in to a country that is leaving. That would be fatal.

She has been called “a bloody difficult woman” who “doesn’t know much about foreign affairs”. But May is very clear that “politics could do with some bloody difficult women”. Eager to avoid exposure to the type of tactics reserved for bloodthirsty miscreants like the radical Jordanian preacher Abu Qatada, Jean Claude Juncker cleverly said that she is very “charming”. But EU leaders partially cold-shouldered May at her first Brussels summit and she was told to expect a “rough going” on the road ahead. She admits that the future will be “difficult” and expects – or pipedreams – to arrive at a “bespoke” deal through “give and take”.

May has been talking a lot about what Dr Mark Carney – who castigates a heads-I-win-tails-you-lose approach to economics – defines as “inclusive capitalism”. But her swipes on “bad side effects from QE” triggered an angry response from the very pro-EU governor who stressed the centrality of the bank’s independence from government. One shameful contradiction within May’s drive to end the “unacceptable face of capitalism” is that in advancing her self-serving designs she has herself happily rubbed shoulders with the glamorous celebrities and waiflike models who ranked highly on Sir Philip Green’s guest list. But setting out her economic vision for a fairer Britain in the Financial Times,  May nevertheless sanctimoniously lectured to us and argued that “when a minority appear to game the system and work to a different set of rules, the social contract fails.”

Market analyst Roger Bootle warns that “a dose of blue-rinse socialism” is the last thing that the UK needs. For him “Maysim must not mean too much messing with markets” because to make Brexit work companies need to feel confident that the UK has a bright future. Eager not to be embroiled in an outright dispute with Carney, speaking to the CBI, the prime minister found it advantageous to finally pay tribute to the Bank of England’s independent role in steering the economy in politically troubled times. The CBI is very clear that access to the single market is “vital” to economic survival and its president Paul Drechsler is warning against a “cliff-edge scenario” leading to a “no man’s land” for companies. Her CBI speech has been interpreted as a potential first step in the search for a transitional Brexit deal to avoid the dreaded “cliff-edge scenario”. Among other things, the government will cut corporation tax; future strategy will also include adding an extra £2bn a year to research and development by 2020.

The former governor of the Bank of England, Lord Professor King argues that the banks are “the Achilles heel of Capitalism”. He calls for a pawnbroker for all seasons model to replace the inefficient lender of last resort system. Lord King would probably disagree, but to the immigrant it seems that the EU hating English nationalists, who just need something to malign, ignored the greater economic good of their country. May stresses she is a “one nation” conservative. Her “only I can unite the country” slogan was consumed by the intoxicated public amid huge fanfare. Yet she is now struggling to dole out the exact terms of fixing the problems of the new sick man of Europe.

I am not trying to tar and feather Mrs May but not everyone is so convinced that she is some pious daughter of a clergyman. Tim Farron, the Lib Dem leader, says she “has no right to govern” and calls her “calculating”, “divisive” and “illiberal”: presumably likening her to someone such as the Hungarian fascist Viktor Orbán. For Colin Yeo, after 45,000 changes to the Immigration Rules and a raft of ruthless statutory measures, May’s latest Immigration Act 2016 is “markedly illiberal”. Aida Edemariam warned the public that the legislation (see here) represents “creeping authoritarianism”. Others are even more dismissive of May. “She is the Brexit prime minister and nothing else” is how Janan Ganesh of the Financial Times described her. He mocks her for using her “stiff upper lip” to “soothe the masses in testing times”.

Some newspapers, including The Financial Times, pretend that May is able to stand up to the Americans. They applaud her for blocking the hacker Gary McKinnon’s extradition to the United States because it would violate his human rights. However, May did not hesitate in approving Navinder Singh Sarao’s extradition. Better known as “the hound of Hounslow”, Sarao is charged with 22 offences in the United States and faces 380 years’ imprisonment for the offence of “spoofing” and causing the “flash crash” in 2010. The arithmetic is simple and the bottom line is that McKinnon is a white guy and the hound of Hounslow is not. (Of course, May is herself guilty of causing a flash crash of the pound.) James Lewis QC thinks Sarao’s case raises novel questions because it is not at all clear that his activities amounted to a crime under the Fraud Act 2006. Sarao complains that his only mistake was being good at his job but thus far he has failed in his battle against extradition.

Luckily, since I am Pakistani, it was easy for me not to take sides in the referendum and I was not at all surprised by the result. But it is equally clear to me that the EU, which takes more than 21% of Pakistani exports, is trying to do a lot of good in Pakistan despite being accused of being like Hitler during the referendum campaign. Council Decision 2004/870/EC, or the “cooperation agreement”, governs EU-Pakistan bilateral trade relations which are underpinned by “respect for human rights and democratic principles as laid down in the Universal Declaration on Human Rights.”

These arrangements are enlarged by the EU-Pakistan 5-year Engagement Plan 2012; trade between the EU and Pakistan has been increasing by almost 5% annually. As of 2014, Pakistan has benefitted from the EU Generalised Scheme of Preferences (GSP). Under GSP+ Pakistan gets generous tariff preferences in return for supporting sustainable development and good governance. But in order to its maintain GSP+ status with the EU, Pakistan must ratify and effectively implement 27 core international conventions on human and labour rights, environmental protection and good governance. It sounds like the EU is pushing Pakistan – a country with absolutely appalling human rights standards and endemic levels of corruption – in the right direction. Personally, I am unshaken in my belief that greater respect for human rights in Pakistan is in the country’s interest.

It is said that the Mays are a match made by the famous “daughter of the east”: Pakistan’s murdered two time ex-prime minister Benazir Bhutto who was twice expelled from office in an undignified manner because of corruption. She may have been corrupt but Benazir was sure to win a spectacular third term in office. Unlike her friend Theresa May, Benazir Bhutto ruled over hearts and people from every nook and cranny of Pakistan were stupidly willing to die for her and for democracy. Though she is an honest woman, Theresa May’s politics will never symbolise the type of hope that Benazir used to. But that is not surprising because Theresa May has never really suffered for her politics. She is not resisting a military regime that kills its citizens. She has never been in prison for political resistance and civil disobedience. She is not a hunger striker. In fact, her great act of resistance is a hard Brexit and now that the political honeymoon is coming to an end it will be interesting to see how long she can survive in office?

Even the business pages in the Telegraph are now turning against May. Eager to have a friendly settlement with the EU, the international business editor Ambrose-Evans Pritchard points out that there was no Manifesto for Brexit and:

It is the proper role of Parliament to discern the national will, and to impose its verdict on ministers. Theresa May is well-advised to bow to this imperative before Article 50 is triggered, even if raucous wrangling in the House greatly complicates negotiating tactics with Brussels.

Donald Tusk – the former Polish prime minister who is the president of the European Council but whose future in his seat is uncertain as Poland’s ruling Law and Justice Party is unhappy with him – is clear that hard Brexit is the only option for the UK. Tusk blames British voters for the issue of uncertainty over expats. He hit back hard after UK MPs accused EU negotiator Michel Barnier of blocking talks on rights of citizens living abroad. Tusk admitted that the argument was “very interesting” but concluded that “the only problem” was that “it had nothing to do with reality.” Instead he found the Brexit vote to be “the only source of anxiety and uncertainty” and yet again invited Theresa May to invoke article 50 prior to beginning negotiations. Tusk explained there can be no “reciprocal” deal on expats until formal talks begin. In a tit for tat move, Theresa May has refused to guarantee the rights of EU citizens to stay in the UK because Britons living in Europe would have been left “high and dry”.

Even if Westminster MPs somehow miraculously do get transformed into “deaf mutes”, the SNP is demanding a second independence referendum so that it can maintain normal relations with the EU. The problem of the past has now been inverted because “staying in the UK now certainly means leaving the EU” and Nicola Sturgeon says “we need to tell our European friends that Scotland is open for business.” Her demands for exclusive immigration rules for Scotland made by the Scottish Parliament have been rejected by May.

Brexit turbulence suits the SNP’s drive for independence. The devalued pound is unattractive for Scotland and the fact that financial services firms will move to Edinburgh may also be a boon for that country: 2.2 million people work in finance in the UK accounting for 12% of economic output and according to some estimates up to 100,000 jobs may be axed in the financial services sector because of Brexit. The NIESR’s grim economic forecast for the future is that:

  • The economy will grow 2% in 2016 before slowing to 1.4% in 2017: with the triggering of Article 50 there are downside risks to next year’s outlook.
  • Consumer price inflation will accelerate, peaking at around 4% in the second half of 2017, and this will impact on real disposable income.
  • The Monetary Policy Committee is expected to look through this near-term inflation and hold Bank Rate at ¼% until 2019.
  • Sterling is expected to remain at around $1.22 and €1.11 this year and next.

When a famous European journalist complained that Turkey was being ruled by a “drunkard” (Kemal), a “deaf man” (İsmet İnönü) and “300 deaf mutes” (the national assembly), Atatürk laughed and called the man a joker because as far as he was concerned a drunkard alone ruled Turkey. Atatürk was an accomplished military man. As Lord Kinross observes, against the odds he was able to nurse the sick man of Europe back to health even if it meant sacrificing all the infected limbs to keep the body alive. In Syria, where he served as a junior officer and was vehemently insulted by the street urchins of Damascus for his Turkishness (the fez and strange uniform etc), Kemal decided that when his rise to power was complete he would ditch the Arab bits of the Ottoman empire and concentrate on keeping its Anatolian heartland and European foothold in Istanbul. At Gallipoli (1915-1916), Kemal showed the western world that a Turkish drunkard could win against impossible odds.

Unlike Kemal, Mrs May is not a drunkard or a field marshal and she is only prime minister by default. Another problem is that many members of Parliament are not deaf mutes and want to know all the petty details of her Brexit plans in advance. In any event, Mrs May is not as lucky as Kemal because if she sacrifices Scotland and Northern Ireland to fulfil her urge for a hard Brexit then she would most definitely not be able to save the modern day sick man of Europe: unlike him she very desperately wants to “save” the infected limbs because otherwise her vision would be compromised.

Although the government has promised to implement the result of the vote, it is not bound by the outcome. The European Union Referendum Act 2015 does not legally oblige the UK to leave the EU. However, Professor Peers wants remainers to focus on precluding “Bad Brexit” rather than trying to stop it from happening altogether. With 80,000 pages of EU law to unpick, the government’s plan is to use a Great Repeal Bill to achieve its future designs. Professor Elliot reasons that the approach is sensible because the “statutory magic” of the bill will on Brexit Day transform EU laws into UK laws. The paradox is that the bill “will seek to get Parliament to confer upon Ministers substantial powers to carry out that process themselves.” Therefore, unsurprisingly, there is wholesale concern that the government will resort to using poorly drafted Henry VIII powers/clauses to empower ministers to “repeal or amend domesticated EU legislation.” (Such clauses enable primary legislation to be amended or repealed by delegated legislation with or without further parliamentary scrutiny.)

Described as “absurd” by some ultra right-wing Tories because they represent the subversion of the will of the people, Gina Miller & Ors v Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin) are very closely watched proceedings during the course of which Lord Thomas CJ said he felt “baffled” by the government’s arguments. Along with Sir Terrence Etherton MR and Sales LJ he found against the government (see here). They are now “enemies of the people” because their judgment may trigger a general election instead of Article 50 and Brexit may be postponed. As noted above, the Europeans are unimpressed with the possibility of delay.

Professor Elliot has found “strong policy arguments in favour of involving Parliament – including in relation to the initial decision concerning the initiation of the withdrawal process.” For him, “the constitutional issue raised by this litigation is about as fundamental as it gets” but he laments that the government is procrastinating on the “core issues” by opting to focus “on peripheral ones.” The claimants say it would be “too late” for Parliament to refuse to agree to a final deal even if it were given a vote. However, May has told Jean Claude Junker that the Miller ruling, which the government is appealing to the Supreme Court, does not derail her future plans about triggering Brexit.

In Northern Ireland, a Brexit challenge was rejected. In McCord, Re Judicial Review [2016] NIQB 85, Maguire J held that the government does not need Parliament’s approval to trigger Article 50 and that the UK’s departure from the EU would not undermine the Good Friday Agreement. His findings are appealable to the Supreme Court where the Miller case will be concluded. In the Miller judgment, Lord Thomas CJ, Etherton MR and Sales LJ stress that Maguire J’s ruling did not “address the principle that the Crown cannot through its prerogative power change any part of the law of the land”.

Professor Elliot also reasoned that the referendum result is not a decision within the meaning of Article 50(1) because it was merely advisory, i.e. “there is presently no such decision that must or can be notified under Article 50(2)” and so “the matter of notification is far from all that is in issue.” He finds the government’s arguments to be problematic because it implicitly concedes that “Parliamentary permission” is required but then claims that the 2015 Act magically provides permission “out of largely thin air”. However, Professor John Finnis thinks that thegrand constitutional principle” raised by Lord Pannick in Miller is “falsified, in its ambiguous over-breadth”. He advanced his attack further by arguing that:

The symmetry between creation and termination of treaty-based UK rights, assumed by Lord Pannick and asserted by Helen Mountfield QC for some interested parties, is falsified by the simple fact that, just as Parliament need have no role in the making of the treaties without which it cannot act to create treaty-based UK rights, so it need have no role in the unmaking of treaties whose unmaking, without more, pro tanto terminates such rights.

In his supplementary note, Professor Finnis seemed to suggest that counsel for the government remained asleep at the wheel and made no representation when it came to giving Etherton MRa clear account of the operation of double tax treaties/agreements in UK law” and missing “the golden opportunity” of providing Lord Thomas CJ:

some authority for the proposition that though treaty making cannot affect rights under UK law without a statute, in the case of withdrawal from a treaty you can actually thereby affect rights that have been enacted in law.

Professor Peers reassures everyone that MPs will not “actually vote to block Brexit” because “they will be concerned about their re-election chances”. Following their own interests, they will thus want to respect the wishes of the majority of UK constituencies who voted to leave. Professor Peers therefore said “there’s no plausible argument that we need to destroy parliamentary democracy in order to save it”. Initially the government tried to mollify, by making a gesture of goodwill, the dissent and said that MPs will be able to vote on the final Brexit deal after May pulls the trigger in March 2017. But it was subsequently revealed by the government that it was “most likely” that MPs would need to be consulted prior to triggering Article 50 and initiating Brexit talks. Western lawyers examining blasphemy cases in Pakistan complain of extreme public (mob) pressure on the defence and on experts. Amid reports of “a number of death threats” targeting the lead claimant, Miller demonstrates that things are imperfect even in the home of Magna Carta. Miller has reportedly spent £60,000 on private security since her High Court win because a £5,000 bounty, for running her over, has been put on her head on social media.

Similarly, specially choreographed angry crowds chanting “invoke Article 50 now” outside the offices of lawyers acting in the case are producing serious intimidation. It is clear that the UK’s reputation as a free and tolerant country has been significantly damaged by the result of the referendum. One thing left for Theresa May to do is to trade her wardrobe and kitten heels for a military dictator’s uniform, dissolve Parliament, abrogate the constitution, suspend guaranteed rights, put dissenters in chains and jail all her opponents. Maybe then she can salvage something out of the sick man of Europe like Kemal Atatürk did.

About Asad Ali Khan, BA, MSc, MA, LL.B (Hons), LL.M

Senior Partner, Khan & Co, Barristers-at-Law
This entry was posted in Banks, Blogging, Brexit, Business, Cases, Citizens Directive, Citizenship and Nationality, Employment, Financial Services, High Court, Immigration Act 2014, Pakistan, Politics, Students and tagged , , , , , . Bookmark the permalink.

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