The most obvious, and most discussed, is the cost of living aspect. Household energy bills, in particular, seem set to sky-rocket and more generally household budgets may be stretched. When households find their belts tightening, support for the governing party is unlikely to go up.

This cost of living aspect may become more severe when the Bank of England raises interest rates. People have become so used to extremely low mortgage rates for so long that even relatively modest rate rises will leave them strapped for cash. Tightening mortgage rate may also take the edge off house prices, or perhaps even lead to some falls. With lower house prices, households may feel less wealthy or have less access to borrowing against their housing equity, further stretching their financial positions.

Households facing rising prices and increased debt servicing costs, on top of incoming tax increases (such as the social care levy), and expecting further inflation rises in the future, might cut back on consumption. But they might also test another path: getting a pay rise. The end of Covid-related restrictions and increased normalization of behaviour has apparently triggered quite a significant job exodus, with over a million people shifting job in the three months to September and some 1.3 million jobs vacancies as of October. To retain staff and secure new staff in a competitive market for workers, firms may be willing to raise salaries (perhaps especially so when stricter immigration rules limit their ability to get lower-wage staff from abroad).

Increased wages may feed through into costs and thence prices, creating a second round of effects on inflation, potentially meaning the Bank of England has to raise rates more than it otherwise would have done and a repeat of the cycle (albeit hopefully dampened).

In itself, a phase of wage rises could create a feel-good factor for the government. But once workers and firms start to expect inflation rises or interest rate rises ahead and wages go up in anticipation, there is a high risk of error. A particularly well-known example of that is the pay round of 1980. Although inflation had fallen from 21.9% in May 1980 to 15.4% in October, firms and workers expected inflation to return to well above 20% and in October wage rise peaked at 22.6%. But instead of rising back, inflation then fell rapidly, down to 3.7% in May 1983. That meant workers had experienced very considerable real wage rises and so firms could afford to retain only their productive workers. Mass unemployment famously followed.

Current inflation is unlikely to approach 20%, so the scale of unemployment-inducing errors of inflation expectations is unlikely to match that of the early 1980s. But the principle remains the same. If the combination of labour market tightness and expected future inflation rises lead to firms and workers agreeing wage rises in anticipation of future inflation, there is a high risk they over-anticipate inflation, leading to wage rises that make full employment unviable. The government did remarkably well (at least in its own terms) in keeping unemployment low during the pandemic. If unemployment rises in the recovery phase that will have political consequences.

Inflation, interest rate rises and unemployment could also easily come to be attributed (rightly or wrongly) to other government policies – most obviously Brexit, or perhaps to any EU-UK trade problems that arise off the back of Northern Ireland Protocol disagreements. Once there are bad economic things around, it becomes easy to blame everything the government does for them.

Boris Johnson’s premiership has been cursed with excessively “interesting times”. Barely had Brexit got done than Covid arrived. He was doubtless hoping that the end of Covid would allow him to move on to other aspects of his own agenda rather than to respond to larger events. But rising inflation, interest rates and, perhaps, unemployment may mean he is not granted that luxury.

But that’s just me. Others have other views and are entitled to express them. One of the more popular such views — supported, according to opinion polls, but a large segment or voters, perhaps even a majority — is that they should be banned outright, as already happens in several Continental countries. Those who believe veiling should be banned attack the practice in all kinds of ways, claiming it’s oppressive and backward and reduces women to things and so on. None of that could reasonably be described as respectful of veiling — indeed, it’s saying it’s so wicked and oppressive that it should be banned altogether.

Another view, in between mine and that of those that say full-face veils should be banned, is that full-face veiling should not be banned but the practice should not be respected. It says that people should disrespect veiling to the extent of refusing to talk to people in their veils in any professional or formal setting. Another form of disrespect here is to ridicule the way veils make people look or the practice itself. It’s obviously not as disrespectful to say that a veil makes you look like a “letter box” or that you’re wearing a “bag” as is it to say that veiling is “mediaeval” and “backward”, but it’s clearly not respectful — and not intended to be. And it’s obviously not as disrespectful to say that one should refuse to talk to someone in a veil in a professional setting as to say that veiling should be banned, but again it is nonetheless pretty disrespectful. That’s the point — the disrespect, in this case, is presented as a more liberal alternative to an outright ban.

Now I don’t agree with either those who say that full-face veils should be banned outright or that their use should be subject to social pressure via a refusal to deal and ridicule. But I think those offering each of these points of view are entitled to have their case heard. Furthermore, as a society I think we should tolerate those in either of these other camps — I shouldn’t shun someone for saying veils should be banned and I shouldn’t shun someone for disrespecting and ridiculing veiling.

We are not obliged as a society to respect everything we tolerate, and just because something is legal that doesn’t mean we have to respect it. That doesn’t mean I would advocate putting up with disrespecting anything and everything. If you started calling Sikh men “towel-heads” or urging that Jewish skull-caps be banned, you and I would not be friends for long. But just because we ought to respect some things it doesn’t follow that we have to respect everything, and the advocacy of disrespecting some things does not open the floodgates to disrespecting everything.

We have a healthy tradition of the mockery of head-gear in this country. Folk have all kinds of fruity comments to make on the hats worn by George Galloway or Vince Cable, George Osborne’s hard hat habit as Chancellor, William Hague’s baseball cap, Jacob Rees-Mogg’s top hat or George W Bush’s cowboy hat. If you really want to see mockery of headgear, look up the online abuse directed at Congresswoman Frederica Wilson, who has literally hundreds of hats (typically cowboy hats) and is notorious for her efforts to get Congress to lift its ban on head coverings during House sessions. Mockery of their headgear would not mark out ultra-conservative Muslims from the rest of society — rather, it would be a withdrawal of the exemption from mockery they might otherwise have as a minority group.

Similarly, criticism of clothes is routine. Dresses are said to look like a “blancmange” or a “marshmallow”. High fashion headgear is said to look like “you have a bird’s nest on your head”. Nuns are described as looking like “penguins”. When Alan Yentob faced the MPs of the Public Administration Select Committee, political sketchwriter Quentin Letts described Camila Batmanghelidjh’s dress as making her look like “a bowl of fruit salad”. To describe a woman in a niqab as looking like a “letter box” is not to mock her clothing in a way the clothing of other ordinary Britons would not be mocked. Rather, it is to remove a special exemption from mockery that her clothes have carried up to now.

As I say, I do not agree that veils need banning or respect withdrawn. But mine is a minority view here, and I see no good reason to demand that Boris Johnson or others must agree with me. I certainly do not agree that their proposal of withdrawn respect is less acceptable than the obviously less respectful option of arguing for an outright ban — as already happens in a number of European countries that fashionable Britons like to see as liberal paradises.

So if Boris Johnson wants to disrespect veils, I say go right ahead. I don’t agree but I shan’t shun you for it, and neither should anyone else. In a liberal society we need to tolerate others. I do not believe that the Conservative Party should exclude conservative Muslims who believe women should be veiled, I don’t believe the Conservative Party should exclude those who argue for veiling to be banned, and I don’t believe the Conservative Party should exclude those who argue for a middle course of withdrawn respect. If we start saying ridiculing clothes is a reason for withdrawing the whip from MPs, we’ll have crossed into a dark and illiberal place.

As we all know, Cameron’s renegotiation failed to secure anything of substance, but he decided to back Remaining in the EU anyway, and then lost the Referendum.

Now, the referendum result was decisive (e.g. in a US Presidential election it would probably have produced a margin of 40 or more electoral college seats), but it wasn’t huge. It’s quite plausible — indeed, it has been said many times even by leading Leavers — that if Cameron had secured a more comprehensive renegotiation, we would have voted to Remain.

We voted to Leave, and leave we will. But if you were part of the collective mind of Cameron’s team, you might with some justice believe that if you could engineer a “departure” that was effectively equivalent to being in the EU but with Cameron’s renegotiation objectives secured, that would not only be desirable from your own point of view (after all, that was precisely what you tried to bring about before the referendum), but also might be accepted by the British public (since it would probably have carried the referendum), at least once it was in place.

That last point (acceptance by the public) is not straightforward. After all, we did vote to leave the EU, so saying “I know we voted to Leave, but now we’re going to stay but on renegotiated terms” might trigger a great deal of opposition, even if those renegotiated terms would have carried the referendum at the time. So one would have to have a public stance of being absolutely definitely leaving.

How, then, to get to a not-really-leaving outcome, but with the renegotiated bits secured? The obvious way would be to say to the British public, in effect “We really, really tried to properly leave, but those beastly Europeans, the rotters, wouldn’t let us. We’re so sorry it turned out like this, but what else could we do? We couldn’t have no deal at all, otherwise we’d all starve and run out of medicine and the planes wouldn’t be able to take off and we’d all die of cancer, and no-one seriously wants any of that.

“Maybe we should have done some preparations to make sure that didn’t happen, but who could have guessed the EU would be such irrational fiends? Now I guess we’ll just have to accept a deal that involves effectively staying in the EU, except with a bit more control of immigration and not participating in the EU’s formal decision-making mechanisms (e.g. in financial services). I’m not sure how we’ll live, but we’ll perhaps find a way to muddle on through, eventually.”

Meanwhile, those same British negotiators would be saying to the EU “We’re going to leave the EU, leaving all the rules for goods and services and food and fish and migration and security. But we’ll opt back into the ones on security. [Time passes] Oh no! You forced us to stay in the market for goods! Oh, no, you forced us to stay under the common rules for (non-financial) services and fish and agriculture! How masterful you are! How dapper! How stern and resolute and cunning and unified and rule-based! You crushed us with your disdain! We’re so humiliated! The EU must be the most magnificent and powerful and assertive and sexy organisation in the world… What’s that you say? Immigration? Financial services rules? Come on, now – you must let us have some scraps from the table of your victory feast, so we can sell the deal internally.”

Through this route, by a total coincidence, the place the negotiation ends up — with the UK trading its notional “influence” over other Single Market rules (which would have been pretty worthless, anyway, once Eurozone states caucused and systematically outvoted us) for additional control over immigration and financial services regulation — is exactly what the British hoped to achieve from the renegotiation before the Referendum.

Viewed in this light, the “hapless capitulation” of May’s negotiating team suddenly starts to look like a certain low cunning. The thing is, though, the EU isn’t stupid. It may well see through this victory-through-surrender strategy and reject it. If an EU member could secure additional migration control and additional sovereignty for its leading industry via such shenanigans, pretty soon everyone would be doing it.

That means that, just when things are looking darkest for Brexit — for the only real measure of “success” and “failure” of Brexit is whether we actually leave, and as things stand it appears to be our government’s intention to fail to leave — we may, irony of ironies, be rescued by the EU.

Being rubbish at all previous jobs is, of course, no necessary bar to being a good Prime Minister. I hoped she might prove to be a political Devon Malcolm. Malcolm was a cricketer, a bowler who was dull, ordinary and fairly ineffectual until he came to bowl against the top players on the top wickets, at which point he suddenly became a world-beater. Perhaps May could have been the same, with her previous weaknesses suddenly transformed into strengths?

Alas, no. From the start she lacked any of the necessary instincts for the task. She got that she had to implement Brexit (how could she not?), but for how to do that best and keep party and country together she had none of the required intuition. She got off on completely the wrong foot, insulting our friends and allies with talk of lists of foreign workers and a focus on immigration. She become enslaved by her officials, believing wrong advice (both legally and, more fundamentally in this instance, politically) on commencing trade negotiations with non-EU countries.

Having backed Remain in the EU referendum campaign she had no Brexit principle of her own, no red line she personally wanted to stand upon with a “Back me or sack me”. With her Home Office background, and having elected to opt in to numerous EU security measures even when the UK had negotiated opt-outs, she just never saw why coming out of programmes like the European Arrest Warrant were important, and on issues like the Irish border she comes at it with a security hat on. Not “How can have the border as soft as is feasible given that we’re becoming a sovereign country again?” but, rather, “What trading relations should we agree with the EU that leaves the Irish border security situation no worse than at present?”

Almost uniquely, I don’t think it was a mistake for her to have called a General Election. I think it was absolutely necessary to have a General Election so that that vast majority of MPs that had backed Remain could face their electors and promise to implement the referendum result, restoring legitimacy to the system. It was also necessary to have a General Election to buy a little time for transitional arrangements so whatever transition we agreed to was complete by the time of the General Election that followed Brexit. I don’t even blame her that much for the result. The Conservative vote share was as high as any of Thatcher’s landslides. Losing the majority was mainly about Corbyn, not about her.

But since the General Election she has become ever more hapless. The government just about staggered through the Phase 1 Brexit negotiations to a result that would have been okay-ish (if imperfect) if we’d insisted on sticking by it. But she didn’t. I think she didn’t really understand what were the really important gains for the UK from that Phase 1 deal.

Not knowing what to do — not having the right instincts or personal red lines; not knowing when to force the Cabinet to choose and how to tell them to resign if they didn’t like it — and believing ever-more-absurd campfire horror stories about the consequences of no deal, her only tactic has been delay: agree a transition with the EU even though the EU insisted on reneging on the Phase 1 agreement to agree to that transition; put off Cabinet decisions on the future relationship with the EU; make no choice or stand or strategy modification on the Irish border; delay, delay, delay and survive until tomorrow, next week, next month, for something may turn up.

These are not issues that can be resolved by reading the briefings your officials give you really thoroughly and then reading them again and again. Almost everything about Brexit involves risk and instinct and playing it by ear and standing on some core principle, because it is a new situation unlike anything anyone in Britain has encountered before.

But if, like May, you have no relevant core principles and never wanted to do it in the first place, and if, like May, your core instinct is to maintain order and as little change as possible while we get to tomorrow, and if, like May, security is more important than sovereignty and imagination and opportunity, you won’t know what to do and you won’t know why and when it might be worth sacrificing yourself for a larger cause and the flow of history, because that cause is not your cause and that history is not on your side. She doesn’t know, and she isn’t right and she can’t do it.

None of this is news. To be honest, she did better for the first eighteen months than I would have expected of her — a low bar. But she should have been removed last December after the Phase 1 deal, and replaced by someone who believes in Brexit and doesn’t see it as mainly about immigration. The past six months have been hopeless, and she has now deteriorated to the point that many Conservatives view her as even worse than Major — a leader so bad that people like me voted Labour in 1997.

Replacing May will not cure all the ills she has created, and a new leader will have considerable challenges starting from here, both internal party challenges, the challenge of the quasi-Communists on 40 per cent poll ratings on the opposition benches, and the challenge of EU negotiators that have been used to dealing with such weak counterparts that they will take some persuading a new leader might be able to stand for him- or herself at all. But a new leader would be a start.

Conservative MPs must know this. The party needs an election campaign where different candidates offer different visions of what to do next. If the party chooses a leader offering Brexit in Name Only, then fine — we’ll have to see off Corbyn and come back to Brexit 2.0 later. If the party chooses a leader seeking EEA membership, then, fine — we’ll have to face the electorate on immigration. And if the party chooses a leader seeking a clean break from the EU and a new start, we’ll expect Conservative MPs to back that leader or go and form that new party they’ve been threatening.

We can’t go on with May. Bite the bullet, replace her, and fight it out to see what we do next.

Who is “us” when we are paying benefits? Anyone who lives in Britain now? Anyone who has lived in Britain for a sufficiently long period? What about Britons who lived here for many years but now live abroad – should we pay benefits to them? We pay benefits out of a sense of solidarity with fellow members of our society. But where are the boundaries?

What about in eras of political tension? Should we side with the liberal states, where freedom of speech and religion and the peaceful use of property are protected? Or with the democracies, where voting is universal? Or with the capitalist states, where the market is most complete? Or with the secular/Christian/Muslim/[insert religion here] states, our co-religionists?

What about if there were a war? For whom are we prepared to see our taxes spent defending, whether we think they are right or wrong? For whom are we willing to have our soldiers die to protect? What if we had to decide whether to fire nuclear weapons in response to an attack, potentially inviting a nuclear strike on our cities? Who is “us” then? If you live in London, should we fire nukes in response to a nuclear strike on Liverpool, on Glasgow, on Dublin, on Paris, on Washington, on Auckland?

Much discussion assumes that developing a sense of “us” is wholly negative — that its purpose is to divide, to define an out-group that can be ostracised or opposed or even hated. But if the only “us” is the whole of humanity, our engagement with other can only ever be shallow. I cannot buy Christmas presents for all the children in the world. We in Britain cannot pay benefits to every poor person in every country – or at least not do so if providing anything close to the benefits we provide now. If we “side with everyone” in political tension, that really means we’re refusing to stand with or against anyone. If there is no “us” in a war, we will rapidly be over-run by others willing to work as a team.

So it is right and proper to have a sense of “us”. Indeed, every society and every family does so, whether it wants to admit it or not. But what may be less obvious is that the best and most useful sense of “us” evolves through time and circumstance.

So, for example, if you lived in Lithuania in the 13th-14th century, the relevant “us” might have been non-Catholics (pagan or Orthodox) fearing persecution by the Teutonic Knights. But today the “us” for Lithuanians may be Lithuanians, Estonians and Latvians, or perhaps anyone across the EU.

Who is the relevant “us” for Britons today? There was a time when it was anyone loyal to the Empire, then a time anyone opposed to the Bolsheviks, then anyone opposed to the Fascists, then anyone Capitalist, then perhaps anyone committed to democracy and human rights. But who should it be tomorrow?

We’re leaving the EU, separating ourselves from our closest allies, the French and Germans and Dutch and Italians and so forth. Our dear fellow-European friends, who have very much been “us” for decades in the struggle against the Soviet Union, will not be “us” tomorrow.

Who will, if anyone? Americans? In opinion polls, Americans have sometimes been regarded at least as favourably than the most favourably-regarded Europeans. So, for example, in Chatham House’s most recent, 2015 survey, the Dutch and the Swedes (the most-liked Europeans) were regarded especially favourably by 33 and 28 per cent of Britons, respectively, whilst Americans were regarded especially favourably by 33 per cent of Britons. At the peak of the Cold War, from the early 1960s to the early 1980s, America could reasonably have been regarded as Britain’s shield and protector. They were “us”, as our crucial allies against Communism. But over the longer-haul Americans are quite alien to us in many ways. Indeed, fewer Britons declare themselves in favour of free movement with the US than with the EU.

Some “us” are easy. For almost all Britons, all those who live in England and Wales and Scotland are straightforwardly us. Those from Northern Ireland are perhaps, to some, one tiny step out. Then folk from Jersey or Man are a tiny further step. Then one more barely-noticeable step to Falkland Islanders, or those from Gibraltar. Britons working temporarily in the Gulf or Spain or the US are “us”. Those born to Britons living abroad? Again “us”, at least assuming they learn English and come frequently to visit or to work and live.

Then we have those whom Britons see as quasi-ex-pats – the grand-children or great grandchildren or great-great grandchildren of Britons who settled abroad, and those who live in societies dominated by such people who still keep British traditions such as Guy Fawkes, and who have never chosen to rebel against and reject us. Britons regard Canadians and Australians enormously more favourably than even the most favourable of any other significant country — at 44 and 47 per cent, respectively, in 2015. Huge majorities of Britons favour free movement with these countries and New Zealand (more than 3 in favour to every 1 against).

So in truth we already know whom Britons regard as “us”, popularly. Some commentators seem queasy about admitting this, suspecting they will be accused of racism or some such nonsense (as if it could be racist to prefer being “us” with 30 per cent non-European-extraction New Zealanders over more than 99 per cent “white” Poles). It is not racist to be willing to be more deeply engaged with citizens of some countries than others. The alternative is not being deeply engaged with everyone; it is being deeply engaged with no-one. We cannot make “us” universal, but we can make it very narrow if we are unwilling to embrace expanding our sense of “us” because of silly insecurities.

It is good and useful to have a sense of “us”. That is what families and regions and co-religionists and ideological soul-mates and geopolitical allies do all the time. The best “us” can change through time. Currently, Britain’s decision-makers are in a strategic policy flux about who the best “us” should be tomorrow, once we leave the EU. One natural option to consider is the “us” that Britons already embrace — Canadians, Australians and New Zealanders. But there may be better alternatives, and we should not be queasy about debating them. If we are queasy, fearing silly, counterproductive accusations of racism or xenophobia, we risk tomorrow’s “us” becoming narrow and the opportunity to reach out being lost.

There have been so many previous “exclusives” and “leaks” regarding what the EU was going to insist upon or what the UK had agreed to that have subsequently proven false that one should be sceptical of such claims, which are probably leaks intended to create rows and divisions within the UK as much as anything else.

However, let us proceed for the moment on the basis that this is correct. Some will say “Well, the December Phase 1 agreement was a fudge that didn’t really resolve matters and the EU is merely attempting to spell out in practical terms what it means.” That, however, misses the fundamental point: what the British wanted from Phase 1 was for the EU to agree we should not resolve these matters in advance of the final future partnership agreement. By agreeing to the fudges of the Phase 1 deal, what the EU agreed to was to not resolve these matters in advance of the final future partnership agreement. That it was a fudge was not some unfortunate compromise that neither side wanted. Rather, it was precisely what the British required and got, and the Phase 1 deal would not have passed in the UK otherwise.

For the EU to now attempt to have these matters resolved in advance of the future partnership agreement would be for it to renege, in the most blatant of manners, upon the Phase 1 deal. There were an increasing number of people in Britain who, at the time of the Phase 1 deal, had come very close to favouring the UK walking away from the talks, on the basis that the EU appeared to have no appetite for a deal and was just stringing us along. If the EU now reneges on the Phase 1 deal, a large block of such people will switch decisively into the “walk away” camp.

The EU reneging on the Phase 1 deal would certainly mean the considerable majority of the UK’s “divorce bill” would never be paid. After all, one of the other key features that the UK had wanted, and got, from the Phase 1 deal was that the deal accepted that the UK’s “divorce bill” payments were contingent upon our agreeing a satisfactory future partnership deal. We did not accept that we “owed” these monies and would pay them whatever subsequently happened. Rather, we accepted we would pay these monies if there was an overall deal. If the EU reneges on the Phase 1 deal, we shall have to think again.

The EU reneging on the Phase 1 deal might or might not mean there would be no transitional arrangements. Even if we eventually part without a future partnership deal, both sides might find it mutually advantageous to agree some bridging phase where we transition from the current arrangements to the new no-partnership world. But the British do not “need” transitional arrangements any more than the EU does, and if the EU had made itself a deal-breaker on Phase 1, we would need to approach any bridging partnership arrangements quite sceptically.

If we exit the talks and declare our assumption that we will be exiting the EU at the end of March 2019 with no new deal in place, pending the EU making credible proposals for one that we could accept, we will doubtless need to put in place preparations for a no-deal scenario. There would be a year to do that, so a great deal could be achieved in the time if we committed to doing so. Some claim that some matters would inevitably over-run. If they’re right, there would be all the more reason for starting preparations sooner rather than later so that the period of hiatus were kept to a minimum. What we should absolutely not do is to accept claims that leaving with no deal is impossible so we must accept a deal on any terms the EU fancies. That will not do at all.

I am sceptical of these reports that the EU is about to insist upon immediately resolving matters that Phase 1 fudged. But less us be crystal clear: for the EU to do so would be for it to renege upon the Phase 1 deal, an integral and ineliminable part of which was that those matters not be resolved until the final future partnership is agreed. If the EU now reneges upon the Phase 1 deal, there will be little choice for the UK but to walk away from the talks. That won’t be fun for either side, but that is the way it will have to be.

One reason we should perhaps be nervous about this is that Mrs May is Prime Minister, and when she was Home Secretary, even after the UK had secured an opt-out from a wide range of EU security mechanisms, Mrs May chose to opt us back into many of them. For a number of traditional Eurosceptics, who had until the early 2010s hoped we might remain within the EU on some renegotiated basis, that was something of a final straw. If the UK government was going to choose to extend its participation in non-economic EU matters even when it had the option not to do so, what hope was there of renegotiating any new partnership with the EU that excluded such things?

Speaking personally (but I suspect I am far from unusual), my position on UK EU membership was not that it was fine so long as we stuck to forming a common criminal code, common foreign policy and so forth, but having a Single Market was unacceptable. No. The things I most objected to were things like the European Arrest Warrant, Europol, the European Investigative Order, or the Common Foreign and Security Policy.

It is thus more than a little disturbing to read the spin regarding Theresa May’s speech in Munich last Saturday, where she set out some of her thinking on the new security Treaty she hopes will form part of the post-Brexit future partnership with the EU. Specifically, this was widely interpreted as implying that the UK will remain part of the European Arrest Warrant and Europol. The Government has attempted to emphasize that, whatever new arrangements we come to in these areas, we will not accept ECJ judgements having a direct effect in the UK. That’s all very well, but doesn’t really answer the key questions. Will we accept the EU (or an EU Member State under EU auspices) being able to instruct us to arrest and hand over someone that state wants to put on trial? Will we accept the EU (or an EU Member State under EU auspices) being able to instruct us to carry out criminal investigative measures?

We may not necessarily object to such arrangements, in bilateral form, in some particular cases — e.g. Ireland regarding things that happen in Northern Ireland, or perhaps Cyprus regarding things that happen in Akrotiri and Dhekelia. But a central purpose of leaving the EU — more so than issues to do with the Single Market or Customs Union — was to escape from such impositions at the EU level.

If we reinvent, via a new security Treaty with the EU, exactly those security, criminal and foreign policy restrictions that leaving the EU was supposed to enable us to escape, we will have failed to re-assert control in the security realm in much the same way that if we were to leave the EU but have a new Treaty keeping us in the Single Market and Customs Union we would have failed to re-assert control in the economic realm.

That does not mean that the ideal is no security cooperation, or even security cooperation only as limited as that which occurs between the EU and non-European countries — any more than the ideal is no economic cooperation or only economic cooperation as limited as that which occurs between the EU and non-European countries. But it does mean that we should place just as much scrutiny over the UK Government’s intentions for this new security Treaty as is placed over the Government’s economic negotiations. What, in the security realm, is the “Brexit in name only” equivalent of staying in the Single Market and Customs Union? Given her past record, and given that for many if not most Eurosceptics it was the reducing the non-economic aspects of cooperation that was really the central purpose of Brexit, we should probably trust Theresa May less on the security Treaty than we do on the economic negotiations.

One important area here regards the transition/implementation period. Why can we not withdraw from most non-economic aspects of the EU immediately upon Brexit? Why continue with embassy sharing or the common foreign and security policy or the European Arrest Warrant or Europol for even a day past 29 March 2019? Since the central purpose of leaving the EU was non-economic, we ought to signal that Brexit really does mean Brexit, and that the transition period really is only a transition period and not an attempt to buy time for reversalists to prevent Brexit truly occurring, by withdrawing from many if not all of the non-economic aspects of our EU membership immediately upon departure.

Second, you might want a way to add money to your pile or to spend money from it that didn’t require you to carry wads of cash around. Maybe you’d like to add your salary in and pay your mortgage out electronically or some other automatic way that didn’t require you to carry anything or even sign any forms every month. Thus, payments (in and out) is the second function a depositor might want.

Third, you might want your money invested so as to secure some kind of return. You may not have the time or the expertise to manage such investing yourself, so instead you’d like to turn over your money to someone else to do that on your behalf. Furthermore, if that other person had lots of people like you giving them their money to invest, there might be economies of scale or the possibility of investing in certain projects or in certain ways that wouldn’t be possible for you acting alone. Thus, investment management is the third function a depositor might want.

Fourth, instead of storing your money or turning it over to someone else to manage on your behalf, you might lend that other person the money, in exchange for interest. Thus, the fourth function a deposit-taker might perform is the receiving of loans in exchange for interest.

Modern banks work mainly through a combination of the second and fourth functions. Depositors lend money to the bank (a “bank deposit” is a loan) and the bank offers a system of payments management for it to receive further such loans (more money “deposited”) and to redeem loans previously made (“withdrawals”). Banks may also offer some wealth management services, particularly to richer clients, but these are not treated as deposits. Some banks may also have safety deposit boxes, where clients can keep jewels or papers or indeed bank notes if that’s what they want. But such storage facilities are, again, not part of what are normally termed “bank deposits”.

Mainstream banks do not provide a service combining storage with payments. But why not? Surely some people who deposit money in a bank do not want the bank to be investing on their behalf and they don’t want to loan the bank money so it can do who-knows-what? and possibly end up unable to repay the loan. They just want somewhere safe to store their money and a convenient electronic means to make payments.

Obviously if you ask people if they’d rather a) have their money completely safe and receive zero interest (or perhaps even pay something) or b) be absolutely certain to be able to withdraw their money and get 5 per cent interest, they’ll take option (b). So if bank deposits are guaranteed by the state, either through explicit deposit insurance or via implicit bank bailout promises or just a general political climate that makes it inconceivable that depositors could be allowed to lose money on the loans they make to banks, everyone will prefer to lend money to a bank to storing it in a bank. (If inflation is really high, so money stored in a bank will rapidly lose its value, again many people will prefer to make loans, since interest on a loan is likely to offer at least some inflation compensation. But let’s assume we’re all agreed we should keep inflation low, and so set that case aside for now.)

It does not follow from the fact people will take free money if they can get it that there is not at least a significant portion of bank deposits that are mainly there for storage purposes. Indeed, arguably it is precisely because a large portion of bank deposits are really just there for storage, rather than investment management or as a loan, that there is such public resistance to the idea of bank depositors losing money. Few people think those that put money into the stock market shouldn’t be allowed to lose their money. Neither do they think that if you lent money to a non-bank business (e.g. a chip shop) and it defaulted, you shouldn’t be allowed to lose out.

No. What makes losing money on bank deposits seem problematic is the money that might just be stored there, such as if someone has just sold one house and is about to buy another, or if some aged person had their life savings on deposit, or if a business had just put money into the account so as to have it there to pay its staff’s wages.

Until the 1970s, depositing money just for storage used to be possible. There were institutions called “savings banks”, which were subject to rules they meant they kept depositors’ money completely safe — they weren’t allowed to lend it out for mortgages or personal loans or business loans or to buy derivatives or anything of the sort normal for modern banks. The rate of interest was very low, but the money was safe.

If we want to make it credible that bank depositors (who are, by their nature, making loans to banks which are in principle just like loans to a chip shop, and if the system is to work must be just as much able to be lost if the business lent to goes bust) can lose money (and capitalism cannot work properly otherwise), we need a way to allow people who just want to store money and make convenient payments to do so.

Here’s how. We could say that every bank licensed to accept retail deposits has to have legally nested inside it a “savings bank”. In order to make an ordinary bank deposit (i.e. a loan to the bank), a depositor would have to turn down makings a (completely safe) savings deposit instead and be told, before the deposit was accepted, that she was making a loan to the bank, that that loan was not insured, and that if the bank were to fail that loan might be repaid in full.

That way, no-one who had lent a bank money (i.e. made an ordinary deposit) could claim she had not had any other option or didn’t realise she was taking a risk. Anyone who wanted simply to store money and manage payments could do so with no risk. And those who had chosen to store money instead of securing higher interest by making a loan to the bank (i.e. a bank deposit) would be likely to rightly resent demands for bailouts and deposit insurance from those that had chosen to take more risks.

Capitalism cannot function properly until we have banks where depositors who have loaned the bank money can lose out. It is unlikely to be credible that depositors can lose money if a large portion of those depositors only ever wanted to store their money but had no option but to make loans to the bank. So if we want capitalism to function properly, we need to re-configure the banking system so as to force all banks licensed to accept retail deposits to offer storage deposit facilities. That will work.

It will be excellent news if interest rates are now going to normalise more rapidly. Economies grow fastest when interest rates are at what economists call their “natural” level — which is not the same thing at all as “the lowest level policy-makers can get away with”. At artificially low rates, firms can get away with using unproductive machines and methods for a while (which may be some considerable time in practice) because they have only very low financing costs to cover. When rates rise a little, firms are forced to be more productive and efficient, because they need to create greater surplus value so as to service their debts. That means that at slightly higher rates, the economy becomes more productive, wages rise and GDP grows faster.

Higher rates are also more socially equitable, because they result in a fairer division of rewards between savers and borrowers. Artificially low rates produce low returns for those that saved up in the past and instead reward those that over-borrowed. Higher rates return us closer to providing fair returns for prudence and thrift and force borrowers to think harder about whether they really want the things they’d like to have now and how they will earn the money to pay back their debts in the future.

A third thing that higher rates will do is to provide a more price-based rationing of credit, which will ultimately be fairer as well as more efficient. In recent years, state-subsidized banks have been subject to very tight regulatory restrictions on their ability to lend. When higher interest rates, rather than regulatory quantitative caps, become a more important determinant of whether money is borrowed and lent or not, whether one gets to borrow or not becomes more dependent on how good a risk you are and less on some more-or-less arbitrary feature of the regulatory ebb and flow.

Policymakers spent nearly a decade with a terror of what might happen if interest rates ever rose, creating a taboo against the normal rise and fall of policy making. That taboo was broken with the near-seamless November rate rise, which did not produce either an economic slowdown or financial turmoil. Bring on some more. Still gradual and careful, and still supportive (even 2 per cent interest rates would be the lowest rates ever were before the 2008 crisis). But back to normally supportive levels. We should cheer as they go up.

The first flows from the fact that, in a well-functioning efficient economy without improper discrimination, one would expect pay to reflect the value of output. (In technical economic terms, equilibrium wages should be equal to the marginal revenue product — the value of the last unit of output produced.) In economic terms, “equal pay for equal work” is not a matter of trying equally hard or being equally experienced. Rather, it is about being paid equally for work of equal economic value.

In a complex economy, people make various career choices at different points in the life-cycle — eg by sometimes taking a job at a slightly lower level of pay than one might otherwise obtain because that job has better prospects, in terms of the experience and opportunities for subsequent advancement and thus better pay later. So if we want to compare how wages compare to output, we’d really like to know that over people’s whole careers, rather than just at a moment in time.

That’s particularly true in the case of the current labour market, since the relative treatment of men and women has changed dramatically over the past 45 years. A man and woman entering the labour market at 18 in 1973 would now be 63. We should expect little to no insight into how a man and woman entering the labour market today will do, relative to each other, over the next 45 years, from the relative salaries of men and women who are 63 now.

What we need, instead, is some way to estimate how the output of men and women relates to their salaries. That’s not easy to get and we do not have good data on it at all. That means that, in truth, despite all the talk of a “gender pay gap”, we simply have no idea about how the pay of men and women entering the labour market now, or over, say, the past 15 years, does or does not reflect the value of their output. I wish we did, but we don’t.

But now suppose that men and women received exactly the same pay, relative to their output. Would that tell us that there was no discrimination against women in the workplace? No it would not, because it’s plausible that what actually happens is that women are not offered the same opportunities as men to maximise the value of their output.

Does it make any difference whether a “pay gap” arises because women are not paid the same for the same value of output or because women are not given the same opportunities to maximise their output? Absolutely it does! If women are not being paid properly according to their output, that is an issue of salary policy at recruitment, performance reviews and salary increments. If women are not being allocated to tasks where they could be most productive, that is a matter of resource allocation policies, eg in project management. If you misdiagnose a resource allocation issue as a salary issue, you will end up over-paying unproductive women whilst simultaneously denying those women the opportunity to maximise their output — the worst of both worlds and damaging to the economy and wider society in the process.

The points of that first issue was that society may let women down, but not do so in the way we normally assume, so we end up with mis-directed debates where the “solutions” may make things worse rather than better. Our second issue is like that as well.

On average, men and women differ, biologically, in various ways. That isn’t simply size, but also hormone flows, vulnerability to various illnesses and natural aptitudes. One classic form of debate goes something like the following. Person A says “Women aren’t seen performing task X,” say, being an engineer or managing a large multinational, “so society must be biased.” Person B responds “But women on average don’t want to do X or some common characteristic of women means the average woman is not as good at X as the average man, so you’d expect fewer of them doing it. Here’s the evidence that shows that.” Person A responds “But that’s only because our culture makes women choose that or have that negative tendency.” But Person B counters “No. Women have a genetic tendency to choose or act that way, as shown by this, this and this studies.”

Such debates seem to me to miss a really key point. Over thousands of years of human civilisation we have learned that various behaviours are undesirable, and we train ourselves, our children and our employees out of them. But is it not plausible that we have done better at training men out of their natural biological weaknesses than we have at training women out of theirs?

Suppose, for the sake of discussion, that it were true that men had a natural biological tendency to respond to potential conflict with anger and violence whilst women biologically tended to give way even when they were in the right. (I am by no means asserting that this is actually how things are. Please just bear with me.) Then suppose humanity has spotted the drawback in angry violence and men have been trained out of it, but women have not been trained out of being overly concessionary.

Then it would be wrong to say “Society teaches women to be overly concessionary.” It’s biology that makes them that way, not society. But to say “It’s biology that makes women overly concessionary, so society has not failed them” is also wrong. Society has, in our imagined case, let women down — not by making them act against their biological nature but by failing to do just that.

I think it’s plausible that our moral and ethical and honour and self-discipline codes have, for thousands of years, tended to be more directed at countering men’s natural weaknesses than women’s natural weaknesses. That would mean that many of our debates about what society “trains women to do” miss the point, just like the debates about whether women get “equal pay for equal work”.

For our society to get the most out of women, we need to teach them to restrain their natural impulses where those are harmful, and we need to allocate women to tasks where they can be most productive. Many of our current debates seem to me to neglect these two fundamental points altogether.

2) The Brexit negotiations will yield agreement in principle on “transition” arrangements to end-December 2020 and there will be broad in-principle agreement on a new free trade agreement between the UK and EU covering goods and at least some services. The agreement covering financial services will not be as comprehensive as some leaks from the UK government suggested we had hoped and the FTA will be scheduled to be agreed only in-principle by March 2019, with some details still to be worked out subsequently. This will be spun in much of the pro-Remain UK media as an abject defeat – indeed humiliation – for the UK government, demonstrating the hugely asymmetric nature of the Brexit negotiations and how foolish any country is to hope ever to leave the EU, with others hailing Mrs May’s efforts to “face down” the “hard line Brexiteers” in her own party “agitating for no deal”, adopting a “realistic” position of accepting the UK’s “fundamental weakness”. Meanwhile, since behind the rhetoric the UK government will have achieved all the negotiating objectives Brexiteers cared about, actual Brexiteers (as opposed to Remainers speaking on their behalf) will be more-than-content with how things proceed.

3) There will be no General Election. There will be no change in the Conservative leadership, but a number of candidates will start to emerge as the main alternatives to Mrs May post-April-2019, which will become increasingly seen as the date for Mrs May to depart. Jeremy Hunt will drift back into the frame as a centrist option that both Team May and ex-team Cameron might support. Michael Gove will be increasingly urged to stand but will continue to protest that he is not an option. Jacob Rees-Mogg and James Cleverly will be promoted in a re-shuffle and be marked ever-more as “ones-to-watch” for the future.

4)  The new German government will be committed to the establishment of a Single European State within ten years. There will be a special EU summit and a joint statement of intent by the governments of Germany, France and Italy. The governments of the Netherlands, Austria and Finland will publicly dissent.

5)  The first self-driving lorry convoys will be seen on UK roads. There will be driverless delivery vehicles in the US.

6)  Online GP appointments will go mainstream, with private sector online appointments being so cheap and so much more rapid than NHS appointments (typically less than a ten minute wait) that some futurists start speculating that online private doctors will replace NHS GPs much as private dentistry has destroyed NHS dentistry. The first serious attempts to make NHS variants function will come by the end of the year.

7) After many previous cancellations, the first commercial space flights will finally go ahead, though probably not by Virgin Galactic. More probably SpaceX.

8) A virtual reality based game, using a head-up display variant of the Pokemon Go concept, will be widely discussed. There will be several notorious accidents caused by virtual reality players using their HUDs whilst driving.

9) After some umm-ing and ah-ing, the World Cup will go ahead. England will make the semi-finals, after winning a penalty shoot-out. Harry Kane will win the Golden Boot.

10)  The North Korean regime will fall in a military coup after North Korean generals refuse to carry out Kim Jong-un’s orders for a nuclear strike in response to a huge US air-, missile- and space-based weapons strike which will reveal that the US has military technologies not previously discussed.

Trade talks won’t start until February or March, so the government has a little time to decide what it should do. In the meantime there are many calls for a “transition” arrangement to begin straight away.

We can think of there as being four forms a “transition” could take. In the first, “transition” is a state rather than a process — to be “in transition” is to be in a state intermediate between EU membership and non-membership. Furthermore, in this firm form, “transition” is open-ended. The European Economic Area is sometimes described as a “transitional arrangement” where the members never quite moved on to EU membership.

During the EU referendum campaign, I suggested that, post-Brexit, financial services rules might establish a “transitional arrangement”, keeping things much as they are now, which was periodically revisited and extended for another review period unchanged. Perhaps one could yet imagine an arrangement of that sort for financial services. But for the UK economy and broader society affected by EU membership as a whole, such an “open-ended transition-to-nowhere” cannot be an option.

In the second form of “transition”, what it really means is the UK staying as a non-voting de facto EU member for some additional period post-March 2019. During the EU referendum campaign, I suggested the UK would probably in practice de facto leave the EU at the end of 2020 (because of the financial issue). Other leave campaigners suggested Article 50 triggering might be delayed or we might leave via some process other than Article 50. Overall, many speculated that departure need not necessarily be as simple as two years after the EU referendum vote (i.e. June 2018) or even two years after Article 50 triggering.

In principle that remains an option, and indeed many commentators suggest that that is almost precisely how “transition” will work in practice, with de facto departure delayed “about two years” from March 2019 — i.e. to the end of 2020 or the very start of 2021. This is, in effect, what is known as the “stand still transition” concept.

With sufficient mutual trust between the UK and the EU, a firm enough approach by the UK to its dealings with the rest of the world, post-Brexit (eg immediately negotiating post-Brexit trade deals with non-EU countries) and if the UK political class were fully reconciled to actually and meaningfully leaving the EU (as opposed to, say, seeking an excuse for a second referendum or seeking an open-ended transition-to-nowhere), I still think this would probably be the best plan. Unfortunately attempts to reverse or frustrate the referendum have been so widespread and sustained, dealings with the non-EU world so weak, dealings with the EU so fraught, and notions of the purpose of transition so misguided that I fear this option may no longer be viable.

Talk of our “needing” a transition period to “reduce business uncertainty” is well wide of the mark. A transition without an agreed post-transition end-state makes the period of uncertainty longer, increasing uncertainty, not reducing it. Talk of our “needing” a transition period to “avoid a cliff edge” is just as bad. If the transition period involves changing nothing, the “cliff edge” simply awaits, unreduced, at the end of the transition period. The “cliff edge” effect is in no way reduced by a stand-still transition.

Many Brexiteers would fear that if a stand-still transition were agreed that had no pre-agreed end-state, the forces of Continuity Remain would conspire to find some way to make it open-ended, or to argue for a “transition” at the end of the stand-still transition, in a Micawberesque hope that something will turn up and Brexit never truly happen.

A third form of “transition” would be an “implementation” or “bridging” period between EU membership and whatever our new longer-term arrangements with the EU will become. That would be a period over which processes and rules would gradually shift, bit by bit, from what they are now to what they will be in the end state. This is the UK government’s stated objective.

The idea here would be that before we have left the EU we will agree at least the broad shape of our longer-term partnership, with a trade and security deal being “struck” (to use David Davis’ term) in a “gentleman’s agreement”, even if a detailed free trade agreement is not formally signed (though we should note that some argue that if there is no formal free trade agreement, it could prove problematic, under WTO rules, for there to be any “implementation period” — implementation is supposed to be implementation of something specific and formal, not just a gentleman’s agreement). Then in the implementation period, the measures agreed in the trade and security deal would be gradually implemented and the final details of the partnership honed.

The fourth option is a variant of the third. Instead of an implementation period, as such, in this fourth option there is a “phased withdrawal” from some EU programmes, whilst others are left unchanged. So, for example, perhaps we might stay in the Single Markets for goods and services and in the single capital market until the end of 2020, but might withdraw from the Common Agricultural Policy, Common Fisheries Policy, Common Commercial Policy, Customs Union, European Arrest Warrant, and European environmental accords in March 2019.

Sometimes, when Theresa May talks of her aims for what she usually calls the “implementation period”, she sounds as if she really means a phased withdrawal, with discussions of withdrawing from some programmes before others.

My guess is that the real choice here is between stand-still transition and phased withdrawal (the second and fourth options above). And I think that if she is to give Brexiteer Conservatives comfort that stand-still transition will not become open-ended, she had better favour phased withdrawal in at least some dimensions.

Probably the most obvious phased withdrawal candidates are the Common Commercial Policy (that is to say, the EU being in charge of negotiating our trade deals for us), the Common Agricultural Policy and the Common Fisheries Policy. But as matters stand, the government is entirely vague.

We need to be told what the government wants. Assuming it is phased withdrawal to at least some degree, does it want us to be in the CAP, CFP, CCP, Customs Union, EAW, environmental rules, tobacco control regulations, what? At the moment we have no idea as to its thinking and the UK political process has engaged in no debate as to the pros and cons of different options. We should at least have a go at debating that internally before we try to talk to the EU about what we want.

So tell, us, Prime Minister — what EU programmes do you intend for the UK to withdraw from during any transition period?

It is a struggle to maintain the appetite to keep answering these points as if they were genuinely raised in good faith, rather than them being transparently about politicking and delay. The EU is politically torn, with no German government in place, the Irish now facing new elections and the Catalan regional election taking place only a week after the EU Council meeting at which the EU must decide whether to finally shift to trade talks.

The significance of the timing of the Catalan elections, in particular, have been largely overlooked in UK discussions. Will the EU really want, having adopted such entrenched positions on a range of Brexit issues, to give the impression it will back down and, as it might see things, “ease the path” to a country leaving the EU only a week before the Catalans effectively decide whether they will do the same? No deal is now looking more likely than not. Although much of the focus is on the UK, the EU is giving every impression of simply not being sufficiently coherent to deliver.

None the less, let us gird our loins, suspend disbelief, and try for a moment to engage on the “issue” (such as it is) of the Irish border. The claim is that this is some kind of huge quagmire to which the UK has thus far offered no plausible way forward and that the only options involve some form of internal customs border inside the UK, between Northern Ireland and the rest of the UK. Obviously virtually no-one in the Conservative Party and absolutely no-one in the DUP would entertain that idea for a moment. So what’s the alternative?

Well, first we need to ask why there are normally border checks when there are customs duties to be paid or regulatory differences across a border to be complied with. Much commentary appears to imagine that it is unthinkable that one could have a border without a “hard border” — i.e. without checks and delays and enforcement being done at the border, or perhaps a few miles inside the border. But why? What is being done at the border?

What’s being done is to check that businesses and individuals who enter a country are complying with the laws of that country and, in some cases, that they are not fleeing the laws of the country they are leaving. But there is no intrinsic reason that needs to be done at the border or ten miles inside the border or at any specific location-for-everyone at all. Within the UK there are about five and a half million businesses. These businesses, by and large, pay their taxes and comply with regulations without everyone turning up at some common point to be checked by officials and policemen. Laws are complied with and those who violate them are identified and prosecuted without everyone being stopped at some hard border.

A hard border is merely a convenient point at which to check and enforce compliance with certain kinds of law and tax. For most countries, in most situations, it will remain more convenient to maintain a hard border than to pursue other means of complying with and enforcing laws, such as whistle-blowers, random inspections of offices, audits and the various other means by which the vast majority of business taxes and regulations are complied with every day. But that does not mean that if one did not have a hard border, it would be impossible to enforce by these other means. The fact a hard border is usually convenient does not mean one could not exist without one.

In the case of the Ireland-Northern Ireland border it will not be more convenient to have a border than to not have one. That will of course create various challenges. Precisely what those challenges are and therefore how best to address them can only be determined once we know what sort of trading arrangements we will have across the Irish border post-Brexit.

For example, will there be tariffs or not? If there are tariffs to pursue and enforce, we might use additional or different means to enforce them from if there are no tariffs. If regulatory differences are large, we might use additional or different means to enforce them from if they are small. If differences apply in agriculture but not in other sectors, we might enforce them differently from if, say, they do not apply to small agriculture operations. We need to know the trading arrangements to work that out.

Some say: “But what about smugglers?” But as things stand there are differences in VAT and various excise duties on alcohol and tobacco between EU Member States, and there are smugglers who seek to take advantage of that. We do not consider that means we must have a hard border between Ireland and Northern Ireland now. We use other means to pursue such criminals.

Others note that if we are enforcing domestic taxes and regulations, our enforcement authorities are operating within our borders, but if an Irish business is non-compliant with a UK tax, the UK tax authority may lack jurisdiction to pursue the matter. Perhaps so, in which case we should be making an agreement with Ireland and the rest of the EU as to how we can pursue non-compliant firms post-Brexit.

The best way to proceed would be if there were a free trade agreement with the EU, and hence Ireland, that removed tariffs and that allowed for mutual recognition of standards, so as to minimise the compliance differences that firms would have to adjust to and that enforcement officers would have to pursue.

But whether or not there is a trade deal, the UK has committed to there being no hard border, for its part. No-one pretends that is easy, any more than it is easy to capture all smugglers and counterfeiters and businesses that are non-compliant with domestic regulation and businesses that do not pay their domestic taxes now. But the fact that it is not easy does not mean it should be considered in any way not feasible. The UK, Ireland and the EU all want a solution that results in no hard border. We can all get there if we try.

The EU may well either not want a deal with the UK or be insufficiently politically coherent to deliver one yet, even if it wanted to do so. (There will of course be a free trade deal in the longer term, but let’s try to do one in the shorter-term if we can.) If the EU does want a deal, it should stop inventing problems and get on with trade talks. Today would be a good time to start.

Apparently, in 2004 and 2005 her Duchy of Lancaster estate invested around £10 million in two funds in Bermuda and Cayman. Then in turn the Cayman fund invested, in 2007, around $450,000 in a number of retailers. One of these retailers (Threshers) subsequently went bust and the other (BrightHouse) was recently fined by the UK’s Financial Conduct Authority for treating its customers poorly. Jeremy Corbyn says that the Queen should make a public apology.

But an apology for what? What is she or her estate supposed to have done? Is the objection to the investment in the retailers? BrightHouse was fined in October 2017, for treating its customers poorly between April 2010 and April 2017. With the best will in the world, how is the Queen holding the equivalent of £3,208 from monies invested in 2007 made scandalous by the company behaving poorly from 2010 onwards? I know they’re supposed to be talented, but are those who manage her estate supposed to be endowed with the gift of prophecy?

Is it the Threshers one? Is the Queen’s estate supposed never to invest in anything that later goes bankrupt? I guess it’s a pity if she lost some money, but beyond that what’s the scandal? Is she supposed to apologize for investing in projects that don’t make money?

Or is the idea that she shouldn’t be avoiding tax, even if it’s legal? It isn’t possible for the Queen to organise her investments so as to reduce her legal tax obligations, because she doesn’t have any legal tax obligations to begin with. All the taxes the Queen has chosen, since 1992, to pay are voluntary.

The BBC rather coyly states that there “is nothing illegal in the investments and no suggestion that the Queen is avoiding tax, but questions may be asked about whether the monarch should be investing offshore.” What “questions” are those? “Offshore” here can’t mean “tax-avoiding”, since she can’t avoid tax. So all that “offshore” can mean is “abroad”. Are we saying that all the Queen’s investments must take place in the UK? Is it illegitimate for her to invest any monies in Bermuda or Cayman — which are, after all, the Queen’s own territories? Is she banned from investing in Canada or Australia as well?

It’s quite remarkable how folk who cry “xenophobia” at any suggestion we should restrict any immigration cannot see how blatantly xenophobic it is when they raise “concerns” about any and all investment from or to foreign countries. Suspicions and innuendo about foreign takeovers and offshore investment come close to the notion that it’s rich foreigners we really don’t like.

If you think the Queen shouldn’t have been investing in BrightHouse or Threshers, say that and tell us why. But spare us the “questions must be asked about investing abroad” schtick. And if it’s really about you not liking rich foreigners or not liking the monarchy itself, at least have the honesty to say it.

The story we have heard tell in recent years has been as follows. Average wage growth has been consistently weak for the past decade, and around 2 per cent per year in recent years so any time inflation goes above the Bank of England’s target, wages start falling in inflation-adjusted terms. In fact, these real-terms cuts have been so pervasive that average wages are actually lower than they were before the 2008/09 Great Recession.

Sound familiar? Well, I’m going to tell you that that story is at best misleading and in practical terms plain wrong.

When average earnings are measured, what that means is: how much is earned by the person in the middle of the earnings threshold. Now some people will tell you that gives a false impression because those below average earnings have earned more through higher minimum wages or because taxes for the low-paid have been cut. There are some things to be said for that discussion, but in truth there’s nothing misleading per se about considering what happens to a person in the middle of the distribution as opposed to those at the top or bottom, provided that over time it’s a distribution of roughly the same people or the same sorts of people.

But suppose, instead, that what happened was as follows. Suppose that we had a set of people on different wages, with a person in the middle (person X) and the wages of person X (who is still in the middle of that original set) rose over time, but at the same time we added a lot of people with wages below person X’s original wage. Then what will happen to the “average wage”? What will happen is that, even though the average wage of the original set of people is rising, the average wage of the increased set might fall.

If someone tells you “average wages are falling”, would you expect that to mean that the average wages of a given set of people was falling? Or would you expect that to mean that, even though the average wages of the given set of people was rising, the set was being expanded all the time with extra people on lower wages? I think you would expect it to mean the former. And for the UK’s data, you would be wrong.

What has happened in the UK in the past decade is a labour market miracle. Unemployment has fallen and fallen and fallen again, even though growth has been steady at best. The way unemployment has dropped is by more and more people being added to the labour force at below the previous average wage. That is why average wages have fallen, not because wages for those already in the labour force have fallen.

That’s easy to say, but do the data back it up? Yes they do. The last ONS report, released today, contains data on the changes in average earnings for those in continuous employment — i.e. the change in salaries, over the past year, for those in the same job they had one year ago. Here is the ONS graph comparing changes in salaries for those in continuous employment with average earnings for the (changing) labour force as a whole.

We can see more clearly what has actually happened to the wages of those in continuous employment, and how recent years compare with the past if we adjust for inflation. Let’s do that.

So now things look very different, eh? The only year in which wages for those continuously employed dropped in real terms was 2011 (when, if you recall, inflation was at its highest since 1992). In fact, in real terms wages for those continuously employed rose faster in 2015 and 2016 than they were doing before the 2008/09 Great Recession. The story of wages stagnating and wage recovery never happened proves to be plain wrong.

Another interesting thing with this graph is what happens in election years. We see that in the year to April 2015, wages rose faster in real terms than at any point since 2005. Perhaps that’s why the Conservatives won a majority in 2015? And we see that in the year to April 2017 wages grew at their joint second slowest rate for more than a decade. Perhaps that’s a rarely-observed part of the reason why the Conservatives didn’t get a majority in 2017? Both 2005 (government wins with wage growth rapid) and 2010 (government loses with wage growth slow) are also election years.

The story of average wages stagnating and falling in recent years is misleading, partly the result of new additions to the labour force being added at below the average wage. When we consider wages for those continuously employed, we see a quite different picture, with real-terms wage rises in recent years being faster than before the Great Recession. Remember that next time you see a gloomy headline.

Some of this is doubtless the natural theatre of EU negotiations, wherein politicians seem to revel in declaring discussions at the point of collapse and regard themselves as heroes for last-minute late night shenanigans. Furthermore, it had been understood for several weeks that a finding of “sufficient progress” was unlikely in October and the commencement of trade talks might slip to December.

There may be more to it than that, however. In Thursday’s press conference after the latest round of talks Barnier rather emotionally declared that the phase 1 issues on the rights of EU citizens, the Irish border and the “exit payment” have “nothing to do” with trade talks. If he hasn’t grasped by now that the UK position is (as it has been from the beginning) that it is impossible to resolve any of these questions without discussing a trade deal, for they are intrinsically and inextricably interlinked, it is hard to see how progress can be made between now and December, either.

Many commentators continue to assert that a deal remains overwhelmingly likely. Very often that is because they assert confidently that the UK will soon fold, agreeing to pay €50 billion, €80 billion, €100 billion, who knows what?, ECJ oversight of 3 million EU citizens indefinitely after Brexit and Northern Ireland staying in the Single Market and Customs Union, without any undertaking of a trade deal to come. The assumption is that the UK will be so desperate for a trade deal that it will give the EU anything to get it. Talk of “no deal preparations”, they say, is regarded by the EU as hot air or an absurd threat to hold a gun to your own head.

I think there is a risk that those commentators reflect a genuine view among the EU and the EU negotiating team in particular. They may be  concluding that Britain will, in the end, give the EU anything it asks for if it plays tough enough. EU negotiators took much the same stance with David Cameron’s negotiators in 2015 and early 2016. For all the talk of Cameron not ruling out backing Leave, they looked him and his team up and down and judged correctly that they’d fold and back Remain, whatever was given or not given.

What the EU got wrong in 2015/16 it may be getting wrong in 2016 to 2018. Maybe some of the individuals it is dealing with do have defeat and need in their eyes. Maybe they would fold in the end, if pushed hard enough. But the EU will not secure what it wants. If May gives way the government will fall and its attempts to concede will be rendered irrelevant, and even if she somehow got them through, UK voters would eject her government and replace them with a UK government that would renege on most provisions of any deal she’d done.

Part of the reason people assert so confidently that May will fold is that they say she has folded repeatedly up to now. But has she? Some in the press report that she folded near the start on the sequencing of talks, and at the time they mocked David Davis’ claim that the need to start trade talks would be the “row of the summer”. But the UK did not concede on that. The agreement was that there would be no resolution of money, the Irish border or EU citizens’ rights until trade talks were complete. “Nothing is agreed until everything is agreed.” And for all the mockery, what was the row of the summer and now of the autumn as well? Why, it was and is when we should start trade talks! Maybe Davis’ wasn’t such a fool after all?

Others say she made a huge concession in her Florence speech, saying that there would be a transition period of up to two years, that the UK would pay its scheduled EU contributions in that period, and that the UK would meet its commitments. But having a transition period was proposed by May from the beginning, in her Lancaster House speech, a transition period was always expected to involve payment of contributions, and the UK position from the start has been that it would meet its commitments – the question has always been what those commitments are.

I don’t believe May has scope to fold – or indeed, to concede anything more – and I’m not convinced she actually wants to. The UK flat refusing to discuss money any more and the UK government publishing plans for no deal preparations, with hints of major expenditure in the New Year, are very encouraging. Philip Hammond is right to say that such expenditure need not start until the last moment, since the government should still hope for a deal for as long as possible. Once the UK starts spending serious money, it will be hard to go back, partly because to justify the sums involved (which I would estimate as potentially £10-20 billion up-front, around the same cost as a lavish Olympics) the government will need to tell British taxpayers that no deal is likely and is the EU’s fault. That is also a good reason to pre-announce a date at which significant spending will start – so as to give the EU a chance to relent and offer some sign (which it has not yet done) of appetite for a deal. As matters stand, the EU is giving every impression of not wanting to do a deal at all.

How to proceed? If we do start spending billions preparing for a no-deal, we will burn good will as well as money. We should communicate that to the EU as well: if you make us waste money preparing for no deal, that will have consequences for you as well.

Instead, a budget for no preparations should be set as a contingency in Philip Hammond’s Budget – though it need not start to be spent for a few weeks. When and if the deadline for the EU to see sense lapses and no-deal preparations must start, there should also be a Cabinet-rank Minister for No Deal, to oversee the preparations.

As Philip Hammond rightly pointed out, there are two forms of no deal. There is an agreement with the EU to part amicably, if not exactly as friends, in March 2019 with no future relationship in place. That can be called a “no deal deal”. There is also total disagreement, with the EU and UK both claiming the other owes it money, the EU claiming it has jurisdiction over EU citizens and their rights are being unilaterally violated, and no cooperation in dealings with the non-EU world either, at the WTO, existing EU trade deals or other issues such as air routes or the environment.

If we are to have no deal, it would be better to have such a no deal deal. So perhaps we should combine the commencement of serious preparations with a no-deal offer to the EU on the three exit questions. Something like the following: €5 billion in exit payment, an automatic right for any EU citizen living in the UK as at March 2019 to become a UK citizen and a guarantee of no physical infrastructure at the Irish border.

I judge the chances of no deal as now perhaps above 50 per cent. We need to be clear and straightforward with the EU about how we see this. There is no scope for further concessions ahead of trade talks and if they do not start by some date (which I would like to be November 1, but perhaps a couple of weeks’ later is necessary) we shall interpret that as meaning the EU does not want a deal. If that date is passed with no signal of appetite for an agreement, we shall appoint a Minister for No Deal and commence significant expenditure, making a take-it-or-leave-it no deal offer on the three outstanding issues.

We’ve had quite enough of the EU deciding whether there has been “sufficient progress”, as if it were marking our homework. It’s time to change the game.

Article 50 was triggered in March 2017, so the UK will leave the EU in March 2019. Since a quarter of the entire Article 50 transition period has passed without the EU offering the slightest indication of being interested in a new FTA or indeed interested even in a meaningful resolution of the Irish border, EU citizens and financial settlement issues, we will very soon need to assume that there will be no Brexit deal with the EU, and use the rest of the Article 50 transition period to actively prepare for that scenario. We should wait a few more weeks – perhaps another five or six – after setting a public deadline for the date at which we will start active preparations for a no deal scenario. It’s only reasonable and sensible to tell the EU they’re running out of time if they truly want a deal, and to give them one last chance.

What would such preparations for a no deal scenario include? Here are a few examples.

1. Commissioning a study, to report quickly, on an ideal schedule of UK tariffs. Announce to businesses what that schedule will be.

2. Buying land around Dover to establish a waiting area for lorries seeking customs clearance.

3. Commissioning a new IT system capable of processing the volume of customs clearance applications likely to be sought.

4. Advertising for new customs processing staff.

5. Establishing a new pharmacovigilance system to report any adverse reactions to medicines.

6. Develop contingency plans for the sourcing of medicines at pharmacies when parallel trade is eliminated, perhaps including stockpiling to cover the transition period.

7. Assuming no grandfathering of current EU deals on trade, air routes, climate change systems, etc. and instead commence negotiations of our own bilateral accords.

8. Developing our own systems for ex-post enforcement of tariffs, rules of origin and other relevant regulations for goods entering via the Ireland-Northern Ireland border.

9. Announce and implement a plan for maintaining the Island-of-Ireland Single Energy Market.

10. Announcing and marketing a new fast-track scheme for EU businesses currently exporting to the UK to invest to establish UK subsidiaries instead.

11. Planning for fiscal measures in the transition year – e.g. will there be temporary tax cuts or temporary accelerated capital allowances or special subsidies to apply in financial year 2019/20?

12. Acquire new embassy space or alternative share embassy options where the UK currently operates via the EU system.

13. Determine and announce which EU sanctions the UK would be minded to continue with and which it would be likely to abandon.

14. Propose a new bilateral system for extradition to replace the European Arrest Warrant.

15. Determine and announce the UK treatment of unitary patents once the UK is outside.

16. Commission studies into new IT protocols that will need to apply for systems that speak with those inside the EU.

17. Develop and propose a new system for those living in the EU to obtain visas to visit the UK for travel or business purposes.

18. Identify alternative sources and routes for radioactive materials

These are just a few examples of what will a major undertaking that will be challenging to deliver in 17 months. There will be those that declare it impossible and insist we must extend the Article 50 period into a further transition period. The main merits of Theresa May’s transition proposals were that they allowed a diplomatic figleaf to cover the UK giving the EU extra money and that they allowed some time for the conclusion of trade negotiations with non-EU states that the UK has decided it is unable to sign off until we leave the EU. The “transition” period is not about “allowing business time to adapt”. Adaptation time will expand to fill the period available. If there is 17 months to do everything, everything will be done in 16 months and 28 days. If there is 41 months to do everything, everthing will be done in 40 months and 29 days. Seventeen months is enough time, but we cannot allow things to drag on any longer.

Once the UK starts actively preparing for no deal in this way, we might yet do a deal, but negotiations will start to become a lower priority relative to the political energy that will need to be devoted to planning for no deal, and voters and businesses will adjust emotionally and practically to the no-deal scenario, meaning they are less likely to go back. The sunk costs fallacy will also be important – once the government has spent serious money on no deal, voter will start to regret it if that money were “wasted” by a deal happening. Furthermore, in order to justify spending serious money on no deal, the UK government will have to declare that the EU appears not to have any appetite for a deal, and that process may burn whatever good will remains.

There is still a good chance that the European Commission is simply over-playing its hand and that the member states have not grasped how close we are to the UK needing to enact a no-deal plan. If UK ministers declare a public deadline after which they will need to assume no deal and act accordingly, that could yet trigger a much more constructive response from the EU side. Indeed, I would still believe and hope that the chances of a deal are better than evens.

One final point to bear in mind is that if we are to switch into a no-deal mode, Theresa May may not be the best person to be in charge. It is at least arguable that her serious mishandling of the situation from June to October last year — especially (though not only) the treatment of EU citizens and the talk of lists of foreign workers at last year’s Conservative conference – was the key factor in the EU’s current lack of interest in a deal. Her Brexit strategy, and thence her period as Prime Minister, has about five or six weeks left to produce progress. Otherwise it will be time to let someone else have a go.

There has been some comment on a recent YouGov survey showing that Labour leads the Conservatives 44 per cent to 4 per cent amongst 18-24 year old voters on “Which party is best” for housing. But it also leads 30 per cent to 13 per cent on “Which party is best” for immigration.

Most ways to address that lead amongst the young would involve facilitating increased net immigration into the UK, and so risk alienating other votes. But there is one important policy that would not: CANZUK free movement.

“CANZUK” is the name given to the Canada, Australia, New Zealand, United Kingdom group of countries by diplomats and trade negotiators. There is currently an active movement in Canada to promote the idea that, post-Brexit, the CANZUK group should form a joint free trade agreement, migration agreement and security partnership. In the recent Canadian Conservative Party leadership election, the candidates that came first, third and fifth were all CANZUK advocates. The candidate that came third, Erin O’Toole, made CANZUK (including all three legs – trade, migration and security) one of the key planks of his campaign. This week he was appointed Shadow Foreign Affairs minister – as strong a pro-CANZUK signal as could be. Politicians in Australia and New Zealand have reacted positively to this Canadian initiative. Also this week, Australian Liberal Senator James Paterson proposed folding Canada and the UK into the Australia-New Zealand “Closer Economic Relations” treaty covering trade and migration. In New Zealand the Act NZ party has an official pro-CANZUK policy.

In the UK, so far, by contrast, there has been little political support offered for the CANZUK concept. This could offer a political advantage to whatever party moves first, especially given the support for the idea amongst younger voters. YouGov did polling in 2015 on the idea of free movement amongst the CANZUK states. It found 58 per cent support (versus 45 per cent support for free movement with the US and 46 per cent support for free movement with the EU). Only 19 per cent of voters were opposed.
According to YouGov, a CANZUK migration deal has majority support amongst every demographic — political intention (58 per cent of Conservative voters, 57 per cent of Labour and even 57 per cent of Ukip voters – of whom only 13 per cent support it within Europe); sex (62 per cent of men, 55 per cent of women); age (59 per cent of 18-24s through to 55 per cent of 60+ – of whom only 38 per cent support it within Europe); social grade (64 per cent of ABC1s, 51 per cent of C2DE – versus only 21 per cent of C2DEs opposed); and region (63 per cent of Londoners, 56 per cent of Northerners – versus only 43 per cent of Northerners favouring it with Europe).

In psephology terms, that’s a dream. Almost nothing not already done is as universally supported as that. Crucially, a CANZUK migration deal would not threaten to increase net migration. The reason is that unlike with most migration discussions, a CANZUK migration deal would not basically be solely about how easy it is for foreigners to get into Britain. A CANZUK migration is two-way, mutual. A CANZUK migration deal would be just as much about how Britons – and especially those younger Britons who might be the most interested – could go abroad. Australia already has more UK citizens living there than live in the entire EU27. Australia’s GDP per capita is more than a third higher than the UK’s, whilst those in Canada and New Zealand are within around 10 per or so of ours. The usual concerns about attracting one-way economic migration from very poor countries simply would not apply. We could have a CANZUK migration deal and still pursue reductions in net migration to the UK.

Australia and New Zealand have already agreed to be the first countries to do trade deals with us as soon as we can set our own trade policy. Canada has said it would like the transition from the current deal via the EU to a new post-Brexit deal to be seamless. Australia and New Zealand have both raised the issue of a migration deal.

If the Conservatives want to appeal to younger voters on immigration, showing that they understand both the aspiration to be seen to be open to the outside world, and the aspiration to ease foreign travel for work and study, a CANZUK deal offers the perfect way to achieve that: sought by the other parties already, popular across every voter demographic, and consistent with other stated goals. If Conservatives want younger voters, a CANZUK deal is one good way to get them.

This is a deeply confused claim. It is simply not feasible to make any final agreement on EU citizens’ rights, the “divorce bill” or the Irish border question without first knowing what sort of trade deal the EU and UK will have post-Brexit. They are not separate questions such that one can be settled before moving to the other.

Let’s see why not. First consider the Irish border. The key Irish border question is to resolve how we would manage the movements of goods and services over the border post-Brexit. The UK is not going to be in the customs union, so there will need to be some system of customs clearance. That could be done via some highly aligned fast-track procedure just before goods set off, probably electronically (as indeed has been possible for UK customs clearance since the 1990s). If we didn’t do things that way then another alternative, if feasible, would be for the UK to do the EU’s controls for it inside the UK, and for the EU to do the UK’s checks inside the EU. A third alternative would be to do all customs checks after arrival.

The UK has noted both of the pre-checking alternatives. Until we know what the nature is of the customs challenge – eg are we collecting tariffs, or checking regulatory compliance, or just checking rules of origin? – what more is there to be said? What else could the EU possibly have in mind as an agreement over the Irish border that didn’t involve knowing the trading arrangements? Giving Northern Ireland to France? Eire re-joining the UK? Ireland leaving the EU alongside the UK to form a new trade area? There being an internal border inside the UK? Every alternative that does not involve knowing the trading arrangements seems absurd.

Similarly, we can’t come to a final financial agreement until we know the trading arrangements. There are several reasons for this, but the simplest to understand is the following. The main mechanism by which the UK will be giving extra money to the EU is through transition. Transition arrangements will be helpful for businesses on both sides to adjust to life when the UK is outside the EU. They will also help the EU adjust to life without UK financial contributions. We should be just as flexible and reasonable in winding down contributions as we hope the EU27 will be in agreeing commercial transition. So we should be providing some extra money under this auspice.

But we cannot agree transitional arrangements until we know what we are transitioning to. Otherwise they are not transitional arrangements at all – they are, instead, an interim or intermediate deal. No interim deal will be acceptable. Transition is fine, provided we know what we are transitioning to. But what we are transitioning to is the new trading terms of the new trade deal we need to agree. Before trade talks we cannot agree a transitional arrangement so cannot agree what (if anything) to pay in the transition period and so cannot come to a final financial settlement.

The fact we cannot come to a final financial settlement also means we cannot finalise EU citizens rights, because some of those may depend upon the financial agreement reached. Some EU citizen rights should have been offered unilaterally immediately after the referendum and they do not require any financial settlement now – namely the right to remain and to work. We should also offer a fast-track right to EU citizens to become British citizens (they came here as our fellow citizens and should be entitled to continue being our fellow – now British – citizens if they want to be). But many other rights for EU citizens who choose not to become British citizens are reasonable matters for negotiation.

A very simple case is the right to vote in local elections. Post-Brexit an EU citizen who has freely chosen not to be a British citizen has chosen to be fundamentally a visitor. We might grant visitors a vote and we might not. There is not deep principle that says we must or must not. It’s a matter for negotiation.

Another issue is the entitlement to contributory benefits. One natural way to deal with that would be for EU citizens in the UK who had made relevant contributions in their own countries to be able to port that contribution record to the UK and thus build entitlement here. But those monies will have been paid to their home state (or state agencies) in the EU. So if the entitlement is ported the governments ought to pay the relevant sum to the UK government, equivalent to the value of the amount the citizen would have paid if the contributions had been made in the UK.

Well, for that to happen we need to make a financial deal with the EU. But we’ve already explained to the EU that we cannot make a final financial deal with the EU, including financial contributions during transition, until we have agreed what trade arrangements we are transitioning to.

There are reasons of negotiating leverage for preferring to have trade talks at the same time as these other matters as well. But even if there were not, we have seen above that there is no way to agree these issues without knowing the trade deal (of which we may hear more on the UK’s ideas when it publishes its trade position papers shortly). Saying we cannot discuss a trade deal until we have agreed these matters is nothing more than empty obstructionism.

Come on, everyone. You’re better than this. Let’s get on with the trade talks and through them resolve these other matters at the same time. There’s a friendly mutually-beneficial deal to do. Let’s get it done.

Nonetheless, there was some discussion, by myself amongst others. I noted that if the UK stopped EU contributions dead in 2019 it would create a significant headache for the EU’s 2014-2020 budgeting period (the “MFF”), so it would make sense to continue UK contributions to the end of 2020. I suggested we should phase out EU programmes in stages, to be completed by around 2022.

So neither the money question nor the issue of transition were news. They just weren’t debated in much depth because they were dull details that could be sorted out in due course. The principle of a phased withdrawal process was repeated in Theresa May’s Lancaster House speech, where she set out her 12-point plan for Brexit. Point 12 there called for “a phased process of implementation, in which both Britain and the EU institutions and member states prepare for the new arrangements that will exist between us will be in our mutual self-interest. This will give businesses enough time to plan and prepare for those new arrangements.

This might be about our immigration controls, customs systems or the way in which we cooperate on criminal justice matters. Or it might be about the future legal and regulatory framework for financial services. For each issue, the time we need to phase-in the new arrangements may differ. Some might be introduced very quickly, some might take longer. And the interim arrangements we rely upon are likely to be a matter of negotiation.”

The position of Leave campaigners during the referendum and of the May government since has been that there should be a phased process of withdrawal. The idea that we should have such a phased, time-limited transition process now is not some kind of “betrayal” or “defeat by the crafty EU negotiators” or “surrender to the Soft Brexiteers” (whatever Nigel Farage, in unholy alliance with die-hard Remainers, might say). It is what was always the plan and always manifestly in the interests of both sides.

Reasonable pragmatism here can make almost the entirety of the “EU divorce bill” issue go away as well. For all the talk of pensions and mortgages on buildings, the vast majority of the monies claimed for the “EU divorce bill” are the EU asking the UK to cover the contributions it was scheduled to make in the future, to the end of the current budget round in 2020 and to some extent into the next budget round. We should not accept that we are obliged to make such contributions (for then we could ask for nothing in return for making them and could secure no good will by making them – if I owe you money I don’t do you any kind of favour by paying it). To be sure, the UK agreed to the budget to 2020, but that was a matter of agreeing what the contributions of EU members would be in that period. The EU agreed in advance, under the Article 50 process, that we were allowed to leave before the end of the 2020 budget period. So we wouldn’t be members of the EU and hence wouldn’t be subject to the contributions we had agreed members should make.

But even though we aren’t obliged to pay – and should stick very firmly to that position – we should agree to pay as part of the transition process. Over a period of a few years, we should wean ourselves off the EU, piece by piece, and the EU should wean itself off dependence on our financial contributions. A transition for both sides.

Here’s a rough suggestion for how that might work. In 2019 we exit the EU and hence are no longer included in sending MEPs or voting on EU directives or represented by the EU in foreign policy terms via EU embassies. We also secure the right to sign and determine the start date of our own trade deals with non-EU countries (ie we withdraw from the Common Commercial Policy (CCP)). We make our EU contributions for 2019 and 2020 exactly as originally planned (that means paying about €37 billion more in contributions than if we stopped in March 2019, or about €28 billion including the rebate). At 2020 we withdraw from the CAP, CFP and Customs Union (so customs union membership continues for one year after the end of the CCP) but stay members of the Single Market in respect of other goods and services.

In September 2021 we end free movement of persons but continue for to be subject to EU rules and directives, interpreted via the ECJ, in respect of goods and services covered by the Single Market. A few months later, in early 2022 (say March, before the General Election) we cease to be subject to ECJ rulings and commence the new free trade agreement arrangements we will have agreed in principle by March 2019 (though doubtless a few final details will need to be honed in the light of teething issues that emerge during the transition process).

In 2021 and 2022 our contributions step downwards, dropping to around €8 billion in 2021 and around €4 billion in 2022. All up, the contributions after rebate would be around €40 billion during the transition period. That should be of about the right order of magnitude to allow the EU time to adjust and make future plans. Maybe in 2019 we might see our way clear to throw in an additional €5 billion or perhaps a bit more for minor items (those pensions etc). From 2023 onwards we might want to be in a few EU programmes. Perhaps that might involve contributions of a couple of billion a year. Every little helps.

Overall, then we should see that having a phased process of withdrawal, time-limited, complete before the next General Election and moving to a destination agreed in advance in 2019 — and a process that phases in not only the absence of the EU for the UK but also the absence of the UK’s contributions for the EU — is in the interests of all sides and is what has always been intended. It is not any kind of “victory” or “defeat” for one side or the other, let alone a “betrayal”. It is simply what an endeavour of the scale of leaving the EU was always going to entail.
We’re leaving. Now let’s get it done sensibly.