Will Boris’s oven-ready Brexit be burnt to a crisp by the EU?

One of Boris Johnson’s best lines of the election was his description of Brexit as “oven-ready.” The question Britain’s new Prime Minister has to decide now is how Brexit will be cooked.

Will it be a perfectly roasted golden brown bird, tender on the inside and crispy on the outside? Or barbecued out of existence by a vengeful European Union intent on keep the UK as closely aligned as possible?

Other than the repetitive – but clearly effective – slogan of “Get Brexit Done”, Johnson has not given any hints as to how he wants his Brexit cooked, or even flavoured. 

Theoretically, the size of Johnson’s parliamentary majority gives him the authority to be head chef in the kitchen, free to take the UK out of the EU after four years of tortuous gridlock and to define a new trade relationship with the EU by end of 2020.

We will only know what recipe Johnson wants to follow when we know the make-up of his cabinet, and who he anoints as Brexit Secretary. As with the three great offices of state, those of Foreign Secretary, Chancellor of the Exchequer and Home Office Secretary, the character of whom he appoints will give a clearer idea of how he wants to cook his bird. What his huge majority of new Conservative MPs does mean, however, is that he is not so beholden to the hardliners in the ERG group, some of whom are still clinging to a hard exit.

As Johnson said again today in his No 10 victory speech, he wants a positive partnership with the EU, one that works closely with our continental neighbours on the big issues of the day but one that heals the country too. They were good, powerful warm words but they don’t give any clues as to what happens next with getting Brexit done.

The only certainty is a future free trade deal with the EU will be precisely that, a trade. If Johnson wants the UK to have good access to the EU’s single market, there is no question that he will be asked to accept certain obligations in return.

The EU will be bargaining hard to keep the UK aligned on key issues such as workers and environmental standards, financial services regulation and tax.

That’s the contradiction that Johnson will have to work through in next year’s negotiations. How to square leaving the EU but keeping as much access to the single market as possible without tying the country up in unnecessary rules and regulations.

To date, Brussels has indicated that Britain can adopt a zero-tariff, zero-quota deal – so long as the UK doesn’t go down the light-touch Singapore route. And that’s the rub. With such a huge trade surplus in goods with the UK, the EU negotiators will do their utmost to ensure we have as few competitive advantages over their members as possible.

This is particularly true of Angela Merkel and her German lobby of industrialists who will be pushing to keep the UK supine, tied down to as many EU regulations as possible to stop the UK becoming more competitive and productive. Quite rightly, the Germans on industry – and the French on finance – are terrified that, once unleashed, the country’s animal spirits will roar again, particularly with the promise of new investment and more spending on infrastructure going into the economy.

Yet as far as one can tell, doing a Singapore is not the route favoured by those around Johnson, his chief advisers such as Dominic Cummings and industrialists like Sir Anthony Bamford of JCB. Their strategy for growth is far more ambitious than that. They want to build up the country’s industrial base, reversing the trade deficit in goods, investing heavily in innovation and new technologies and giving space for the UK’s SME sector to grow.

If Cummings is as successful at persuading the PM to take this route as he has been in advising him on the election, then the country might be onto a winner. But there is much hard work to be done, particularly on redirecting investment into the real economy and, more pertinently, into the North and South West, to rebalance the regions.

What, then, are the most realistic options for PM and the new Brexit Secretary to pursue?  

At present, there are still only four serious options for him to take. First, Johnson could go for a “managed no deal”, falling back on WTO rules and mutually agreed mini-deals. This could be done within the deadline.

Second, the PM could go for what the EFTA4UK lobbying group call the “Tesco” style no-frills deal. This is what countries did in the 1970s before the European Economic Area was set up. This allowed EFTA countries to sign individual FTAs with the then European Economic Community. These took on average nine months to negotiate but were basic.

Third, the UK could stay in the EEA and join EFTA, the European Free Trade Association, of which Norway, Switzerland, Liechtenstein and Iceland are members.

Fourth, he could go for a super EU-Canada type deal, CETA, which is likely to take longer than 11 months.

Each option has its benefits and risks. The danger with a managed deal is that going for WTO tariffs might tip the already fragile economy into recession, and annoy the business world which craves certainty.

The second option could be a good starting point but would not take into account the UK’s huge financial services industry unless negotiators can get a side agreement on mutual recognition or equivalence.

The third EFTA option makes a lot of commercial sense because it gives the UK the most access to the single market and keeps the UK out of EU legislation on fisheries and the ECJ. But it also means the UK would have to accept free movement of workers. So unlikely.

The problem with a Canada style deal is the amount of time required to do such a deal. And time is of the essence. The UK and the EU have only until July 2020 to agree on whether they will extend the transitional period by up to another two years. So far Johnson has ruled out an extension but now that he has such a majority, he has the freedom to change the goal posts.

Maybe there is a fifth recipe that Johnson has ready for the oven that we haven’t heard about? Who knows, the PM may surprise us once again.