A full-blown trade war with the EU is unlikely, but Britain already suffers bitter side-effects

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Good morning. Almost all of you thought that yesterday’s newsletter was nonsense from soup to nuts. On reflection, so do I. Some thoughts on that, and the UK government’s Brexit strategy below. Let me know what I’ve got wrong today at the below email.

Inside Politics is edited by Georgina Quach. Follow Stephen on Twitter @stephenkb and please send gossip, thoughts and feedback to insidepolitics@ft.com.

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Beyond the Horizon

The UK government will scream and scream until it is sick: new legislation to unpick the Northern Ireland protocol will be brought to parliament on Monday. Yesterday Tory Eurosceptics fired a warning shot at Boris Johnson, telling him they could vote it down if it does not fully “neutralise” the Brexit text.

As I’ve written several times before, I don’t think we should take the UK government’s position on this all that seriously. Time and time again, Johnson’s government has stamped its feet, briefed friendly newspapers about its intentions to rip up the protocol before capitulating. As the FT’s public policy editor Peter Foster writes in his excellent weekly Britain after Brexit newsletter, new legislation would be the beginning, not the end of the matter:

Even imagining for a moment that such a bill became law (a long way off) and that Johnson’s ministers used the powers contained therein, it has never been clear why Johnson or the DUP think that this would resolve the row over the protocol.

What does Johnson think would happen after this unilateral action to turn the protocol on its head? How do his supporters think Sinn Féin would react to such a move? Let alone the European Commission and EU capitals?

Pulling the trigger only leads to the threat of a trade war with Europe during the worst cost of living crisis since the 1970s and further polarises the very Northern Ireland peace process that the Johnson government says it is seeking to protect and defend.

The UK’s annual capitulation in the Brexit talks has had an uninterrupted run since 2018 (as readers of the essential Trade Secrets briefing will know) and I see no reason to think that sequence will be broken.

But I wonder if we’re not perhaps underselling the political cost of what you might call “actions short of trade war”. If because of the protocol row, the EU is blocking UK universities from accessing the €95bn Horizon Europe research programme — the world’s biggest — is that a “trade war”? If future collaboration on new technologies or other projects is stymied by the bad air created by the UK government’s briefing, is that a “trade war”?

I still think that, given the economic costs of a trade war with the EU, the UK government will do what it has always done and find a way to exit from a full stand-off with the EU. But we should, I think, be less preoccupied by the question of whether there will be a full-blown trade war with the EU (there won’t, because the UK government will always retreat) and more focused on what bits of the UK economy will experience their own private trade war.

It’s hurting, but it’s working

Yesterday I wrote that a bad economy was bad news for the Conservative government, but good news for Boris Johnson, because no one else would want the job given the tricky economic backdrop. By email, text and telephone, you rose as one to ask “Stephen, are you on glue?”. As one reader wrote:

I disagree with you totally about potential successors to Boris Johnson being put off by the current state of the UK economy and its even more gloomy prospects. In 21 years of working for successive British governments I never met a single minister whose ambition to rise to higher office would be significantly dampened even by more dire economic circumstances than the OECD is forecasting.

Furthermore, such is the nature of most politicians’ ego that no more than a handful of those with whom I have dealt would have any serious doubt over her/his ability to fix things given the chance. In short, I reckon you are underestimating the power of both ambition and ego among the political class. 

In my defence, several backbench Conservatives thought that, while I was wrong to think that Johnson’s would-be successors might be put off by the dire OECD figures, it does help the prime minister that MPs looking around for a better alternative may well look at the dire economic picture and conclude that there is no better alternative. But I accept that any would-be candidate is not going to be deterred by bad economic news.

Another person who was left unconvinced by yesterday’s email is Robert Shrimsley. But he made a good point about one way the bad economic picture helps Johnson and the Conservatives. The painful measures that UK politicians have tended to reach for to tackle inflation are ones that Conservative governments have been more comfortable handing out than the Labour party.

I think this is right. If the next election turns into a question of “who is more willing to pile pain on households?” that favours the Tories. But if the prime minister isn’t capable of setting out the need to do that ahead of time, it won’t do him much good.

Now try this

I am very much enjoying the new Star Wars TV series. Here’s that man Robert Shrimsley again on some other creations deserving of their own cinematic universes, from When Harry Met Sally to The Godfather.

My column this week considers the trend of “fan capture”: when mission-aligned organisations end up talking to themselves and harming their own objectives. Have a lovely weekend.

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