Corporate Watch

When the no-frills, no-nonsense British Prime Minister Theresa May crossed to center-stage dancing, raised hands swaying to the languid swing of ABBA’s “Dancing Queen,” it all said something was terribly amiss. It was in October, at the Conservative Party’s conference. Despite the standing ovation (the only polite and “veddy-British” response expected) to the somewhat awkward dancing, the matter to be discussed by May at the conference was not as forgivably acceptable. She was standing for approval of her planned UK transition deal with the European Union (EU) through to the end of 2020, after the March 29, 2019 effectivity of the British withdrawal (Brexit) from the EU, as signified by the UK in June 2016.
An analysis by the political editors of the Daily Mail traced the development of the draft Brexit transition proposals (, Nov. 28, 2018). The “Canada-style deal” (in the way Canada deals with the EU) proposed that the UK would have free trade with the EU, but no freedom of movement (stop free immigration from and to EU countries, no more reciprocal open visas for travel and business). However, the Gross Value Added (GVA) or the goods and services produced per area in the UK was estimated to decrease in a range of -4% in London to -6.5 in Northeast Midlands, with varying percentage decreases in between for the 11 major regions. The predicted effect on Gross National Product (GNP) of the UK would have been about -6.7% (negative) growth for the next 15 years (Ibid.).
The “Norway-style deal” prescribed free trade agreement with EU with freedom of movement, which will have varying but less negative GVA effect for the regions, ranging from -0.9% (London) to -1.5% in Northeast and West Midlands. Predicted effect on GNP might have been a -1.4% growth decline over the decade and a half (Ibid.).
May’s final proposal (already preliminarily discussed last week with the EU Committee on Brexit), the “Chequers deal” (named after the Prime Minister’s country residence), will have free trade with the EU, with freedom of movement for goods (import/export) but not for people (no free immigration/travel and business visas) after Brexit. The GVA effect would again vary for the regions, ranging from -1.8% in Wales to -2.5% in London (because London was the favorite place for EU immigrants and businesses, and London would suffer most from the decreased economic activity and output). Predicted GDP over 15 years would shrink -2.5% (Ibid.).
No way would a “No-deal” Brexit be acceptable to May. Government analysts predict that if the UK would deal with the EU simply on World Trade Organization (WTO) terms, GVA would plunge -10.5% for the North East, with the Midlands not far behind, while London would suffer the lowest, -6.5%. Predicted GDP growth would be -9.3% (Ibid.).
It is even embarrassing that the UK comes to the table with the EU at this time, negotiating from a position of disadvantage, when Brexit has already been declared to the EU and to the world. It will be doubly embarrassing for the UK to now say to the EU, “Sorry, we reconsidered and want to stay with the bloc.”
“The UK cannot just crash out of the EU without any transition agreement,” Bank of England (BoE) governor Mark Carney said. Such a scenario would trigger a financial crisis in which the pound would plunge by 25% and house prices would fall by 30% (AFP News, Nov. 29, 2018). And Finance minister Philip Hammond said that at this point, the only thing to think about was how to minimize the costs of leaving the bloc — estimated by the BoE to be around 3.9% of GDP over 15 years (Ibid.).
Independent experts have said that 3.9% of Britain’s GDP will amount to about 100 billion pounds ($128 billion) a year cost to the economy by the 2030s (Associated Press, Nov. 29, 2018). Without May’s negotiated divorce settlement deal with the EU, Britain could plunge into its deepest recession in nearly a century, with the economy shrinking 8% within months as inflation would soar to almost 7% and unemployment to 7.5% from the 4.1% now (Ibid.). Carney said, however, that Britain’s financial system will be able to withstand the shock as it did after World War II (, Nov. 28, 2018).
But note the gradations of negative impact of Brexit (even under the final “Chequers” proposal), on the various regions of the UK, as studied by the Daily Mail (op. cit., Nov. 28, 2018). Recall that at the June 23 referendum, 51.89% voted to leave EU and 48.11% voted to remain (CNN News, June 24, 2016). After 43 years with the EU, did the British people really want out — back to national (being alone, and having its own trading identity and independence) and out of supranational trade and commerce in the togetherness of a single market? Did the regions want to lose their “upgrade” of opportunities, from the added trading muscle of the UK from the EU membership?
But the day after the Brexit referendum, Nicola Sturgeon, Scottish First Minister, cried out that, “As things stand, Scotland faces the prospect of being taken out of the EU against her will. I regard that as democratically unacceptable” (Reuters, 06.24.2016). Scotland, a nation of five million people, voted decisively to stay in the EU by a clear majority of 62%, clashing fiercely with the UK as a whole, which has voted in favor of an exit (Ibid.). In Scotland, the recurring cry for secession from the UK was intensified, perchance to be able to join the EU on its own, as a separate and independent country.
And so, Tory leader David Cameron, Prime Minister since 2010, who had pushed for a “Remain” win, offered to resign not so immediately, wishfully delaying his exit to October (CNBC, 06.24.2016). Conservative MP, Mrs. May, the home secretary since 2010 assumed the position of Prime Minister in mid-July when Cameron had to resign ahead of his intention to do so, in the face of street protests against the confirmed Brexit by the polls (BBC News, July 11, 2016).
What else then would May be expected to do, think about and consume her passions with, but the implementation of the Brexit vote, and the transition plan to soften the divorce from EU? It seems bloody late that the mechanics of transition are being discussed and to be decided by Parliament only now. It would have been lovely if the details of new trade and business relationships were transparent to all publics, and resolved by government when Brexit was just a gleam in the UK’s eye. After all, Brexit could painfully and embarrassingly be one giant step backward for Britain, father of the world, one might say — who, up to these modern times, can have democracy and the monarchy coexist, symbolic of mundane civil politics guided by universal ethics from God-given authority.
Theresa May might have to do more provocative dancing than her stilted movements trying to mimic the inimitable Meryl Streep in the 1999 movie Mamma Mia!. She has to convince Parliament on Dec. 11 to vote a majority “Yea” to her “Chequers deal” as a transition settlement from the UK divorce with the EU.
And Parliament might have to do a “Full Monty” to reveal to itself and to the global audience how the UK now defines its role and participation in the practically borderless socioeconomic and political “coopetition” (cooperative competition) in world markets.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.