Here we are, Robert.
The road to Brexit.
Are we nearly there?
Bong.
Bong.
Robert.
I can sense your
frustration in the writing.
OK.
So here we are.
It's the end of January, 2020.
This whole thing
started in June, 2016,
but it's a moot point whether
we are, in fact, there.
So I think if we were
actually drawing the road,
it would have sort of gone
like that, and through there,
and around here, and
dead end, and then
it would have gone over here.
But actually, I think we are.
I think we are at Brexit.
It is happening at
the end of this week.
31st of Jan.
Even the people who most
aggressively campaign to stop
it accept it's happening.
It is happening.
Nothing can happen
to stop it now.
So I've got a little
surprise for you.
Here we are.
Here's one I made earlier.
Excellent.
Here we are.
So...
Bong.
On Brexit night, on
Friday night, you
may have to do the bongs,
because there will not
be any official Independence
Day bongs from the Big Ben.
There is a party in
Parliament Square, which
Nigel Farage and his
Brexit party crowd
have organised, where I
believe they have tape
recordings of Big Ben bonging.
My favourite aspect of this is
that nobody really contemplated
the fact until quite late, that
the UK is leaving the European
Union at midnight, but that's
midnight Brussels time.
So in fact, we're
leaving at 11.00pm.
And among other things, is
the Graham Norton Show on BBC
is being postponed, so
that we can all watch
the great moment of departure.
The interesting thing is
that actually as the day has
approached, Boris Johnson
has sort of taken pains
to almost play down any
idea of triumphalism,
because he's now got this
strange task of having
to lead a nation which was
split down the middle on Brexit.
So he can't really afford
to have bongs, parties, call
it Independence Day, as
presumably the Daily Express
and Nigel Farage would like.
Well, it's going to be straight.
He's treading quite a fine line.
So there's going to
be a countdown clock,
I believe on the door
of Downing Street.
He's doing an address
to the nation.
Government buildings are
going to have lights on them
in red, white, and blue.
Red, white, and blue.
It's a red, white,
and blue Brexit.
Exactly.
And then in Parliament Square,
Nigel Farage and his crowd,
him, other people
from the Brexit party,
and the sundry
talk radio figures,
are all speaking about
what a great day it is.
And as you said, Britain's
Independence Day.
It is interesting that a number
of the Conservative MPs who
have, not all of them, but a
number who were very strong
advocates for
Brexit, they're all
trying to take the same tone
that you were just saying.
It's like, actually,
look, we know,
we recognise this is a sad
day for a lot of people.
We need to just go about this
with a degree of humility,
which I think is a
good thing, actually.
If they can stick to
it, it's a good thing.
OK.
So one of the things that
has happened as well,
is it not just that Brexit
is definitely happening?
This place, parliament
becomes much less exciting,
and, indeed,
relevant than it has
been for the last
few months, because
of Boris Johnson's majority.
As it regains his sovereignty.
Yeah.
Exactly.
So as he regains
his sovereignty,
it's actually kind of sidelined.
So I'm sorry, Big Ben, we're
going to put you over there.
Because, the story, as
it develops, in fact,
the next significant moment is
the end of this year, right?
Yeah.
And middle point
of this year, end
of June, because here
we are now, Brexit day,
but there is another
journey to here
when a whole load of decisions
will have to be made,
and then to here.
Yeah.
Just after Brexit day.
So it's very early February.
We get the first
sight of negotiating
mandates for the European
Commission, which
are being agreed now.
And we should see them
first week of February.
We're also promised a speech
by Boris Johnson - again,
first week of February
- where he sets out
what his approach to these
negotiations is going to be.
I'm told that the EU mandate
is going to be very, very
detailed, and the
Boris Johnson one
is going to be more thematic.
But he's sending his
big EU negotiator
David Frost out to do battle.
And so we're going to get a
first sense of where the battle
lines are going to be.
What are we calling this?
We're calling this the
UK priorities, or...
Yeah, something like that.
Yeah.
These are the battle
lines, which will
determine the rest of the year.
As you said, June is when
the British government
has to ask for an extension
of the transition period
beyond December, 2020
on the assumption
that it's not to get
the deal done in time.
And nobody thinks
that's going to happen.
Which is interesting, isn't it?
Because when this started
to come up in the autumn
there was some chat about how,
if you sort of got to here,
what happens if you get
three-quarters of the way
through the year?
You're really making a lot of
progress on the negotiations.
A deal is very
definitely possible.
It's on the cards.
But it is going to take longer.
You're kind of stuffed,
because back here you should
have asked for an extension.
What happens here?
Is there a realpolitik
way in which
both sides, EU and the UK, start
to say, well, you know what?
We need another
couple of months.
But you're sort of screwed
by this legal deadline.
Before the election, I
don't know if you remember,
Boris Johnson was given
to talking about Gatt
- was it Gatt 24?
I can't remember what
number Gatt it was.
But we said that if you were
close to securing a trade
agreement, the two
sides could roll over
their existing arrangements.
So in theory, I
suppose there's that.
But the truth is that
the Conservative side
believes in the deadline.
It doesn't believe in paying
more money to the European
Union.
In the period of
transition, the UK
has to take and accept all of
the rules from the European
Union, which no
longer has any say.
So just to be absolutely clear
what we're talking about,
so from Brexit day itself.
To the end of December, '20.
The end of this month,
January to December,
we are in a period
of transition.
So we're effectively
out of the EU.
We are no longer a member
of the European Union,
but we abide by the
existing arrangements
while we negotiate
our end state.
And that's what we
still don't know.
And in return for those, I
think life goes on as normal.
So the truth is, the morning
after Brexit, for most people,
nothing will have changed.
Absolutely.
Absolutely.
But the Conservatives
do not want
to go beyond that deadline.
It was possibly the price of the
day of Nigel Farage pulling out
of the general election.
And so they've rather put
themselves up against it
because time is on
the European Union's
side in this negotiation.
And if the UK is
frightened of falling over
the edge of another
no-deal cliff,
then the European Union has
a lot of advantages in this.
The interesting question,
and it's very hard to know,
because at this stage everyone's
just being tremendously gung
ho, and it's the
early opening rounds,
is that - I've heard
it from enough people
to think it's at
least possibly true
- that the UK actually is
prepared to go over the cliff
this time.
And one reason for that
is that the moment you
say you're diverging
on regulations,
and regulatory alignment, a
lot of the issues like lorries
at Dover, and all of
the friction in trade,
becomes a reality anyway.
And the government is committed
to regulatory divergence.
So that seems to me
the whole battleground.
There is a really horrible
way in which there is
a kind of deja vu about this.
But we've got the
whole of this year
before we get back
to this threat,
this threat of a cliff edge,
which we experienced twice.
It felt like so many more
times last year in 2019.
Well, I still got the
tins of tinned tomato
in my house's spare bedroom.
Exactly.
No, but exactly.
So the whole nation, and,
indeed, the rest of the EU
was sort of poised -
this feeling of danger
twice last year.
And we might end up
back there, so it's not
quite the end of a road.
There is a sense of
going back in a circle.
Yeah, absolutely.
I mean, it's absolutely...
I mean, if the UK was prepared
to do the kind of Brexit
that Remainers wanted, which
is very close in alignment.
Hopefully incredibly close
to the European Union.
There is the easy part
of this, the easier part,
which is an agreement to have
zero tariffs and zero quotas,
which both sides
fundamentally want.
That's the easier
part of this game.
But the European
Union looks like it's
going to hang very tough
on the issue of what
it calls level playing field.
Which is not having
the UK able to compete
against the EU by having
much lower corporation tax,
by having all sorts of sweeties
that it can offer to business
to attract business to the
UK and away from the EU.
They want the UK to commit to
that level playing field, which
would defeat any economic
purpose of Brexit
for those who
believe there is one.
And the UK is very
resistant to this.
Of course, the chances
of it diverging wildly
on the 1st of January,
2021 are very slim,
but it doesn't want
to commit to what's
called dynamic alignment,
where every time the EU changes
rules, the UK has to change.
So that is the bulk
of the battleground...
that and fish are the
bulk of the battleground.
I'm going to come on to fish.
Please do draw some
fish, because this
is what I've been looking
forward to all week.
This is the fish bomb.
That is a bomb, not a fish.
OK.
Look, he's got an eye.
Now it's a fish.
All right.
I'm going to draw a better fish.
That is a better fish.
There we are.
Oh, it's a shark.
I hear the scales
falling from his eyes.
Should we say that?
Yes, OK.
It's got to have some fins,
otherwise it's not a fish.
There we are.
We come onto fish,
because there's fish,
there's cars, which stands for
kind of manufacturing industry,
and then there's
the huge service
economy of the UK, which
is the City of London,
but also all of the service
sectors of the economy.
But I just want to
take you back a stage
though, because describing this
cliff edge the end of December,
and the fact that
the government,
Boris Johnson, Sajid
Javid, to an extent,
have been saying very clearly
there will be divergence,
and this will be the
absolute deadline.
There will be no extension.
We have heard that from
Boris Johnson before.
Dead in a ditch.
I'd rather be dead in a ditch
than not leave on October
the 31st, 2019.
This is a prime minister who
plays by different rules,
is allowed to play by
different rules by his party
and by the country, it seems.
So if for the moment, but
say we did get to here,
it's not necessarily
political death for him.
I would be astonished if
he does agree an extension.
I really would be surprised.
And I think the first half of
this year is going to be awash.
There'll be lots of
lawyers, lots of anger.
And I don't believe...
I think we'll get to here,
which is the German presidency
of the EU.
And I think this is where
it's all going to happen.
I mean, you're completely
right obviously.
It could all be posturing.
It could just be the
starting point and opening...
No, it might be sincere now,
but how sincere would it be...
sincere would it be on the 20th
of June when you're thinking...
I don't believe
they will extend.
I really don't.
That part, I believe what
the government's saying.
OK.
Whether they're really prepared
to topple over, and stick
to their hard line,
that's harder to say.
But there are some
reasons why they might.
You've got a majority of 80.
He's got four and a half years.
He's got time to weather any
immediate political storms.
Now, obviously some
storms are so bad,
if you think about
Black Wednesday,
people look at the government,
go, no, you're no good,
that's it.
Well, that is the
comparison they should be
having in their mind as well.
But the difference
is, at that point,
Labour party was
led by John Smith.
And we're not sure who the
Labour party will be led
by then, but it's not going
to be anybody like John Smith.
He may think he's got the
political time and room
for manoeuvre.
And as I said, if you are
refusing to align regulations.
If the level playing
field isn't happening,
then a lot of the
visible grief of Brexit,
of a no-deal Brexit
almost, will be there,
because you will have
problems at Dover,
you will have friction
introduced into trade supply
chains.
And they may take
the view that this
is the price we have to
pay to get what we want.
And the problem
is, because - it is
the same as sort of the madman
theory - madman theory -
that actually it's
only if you can make
you believe you'll really
do it that you have
any chance of breaking through.
OK.
I'm going to let you
talk about the fish now.
So you've got your fish.
Yes.
But the fish have
opponents, right?
The main reason why this is,
in fact, an excellent drawing,
is because fish could torpedo...
Oh, God.
The whole thing.
It's a fish torpedo.
While you're explaining why fish
could torpedo the whole thing,
I'm going to try and
draw a Nissan car.
This is going to
be a first for me.
It's probably going to
look like any other car.
As long as it doesn't
look like a fish.
Just to warn you.
So look, the point,
the fishing industry
has become a massive and
disproportionate factor
in all of the conversations.
I'm sorry.
I'm mesmerised
now by the Nissan.
And of all of the conversations
that have gone on so far.
Because fishing is less than
1 per cent of Britain's GDP.
It's tiny as an industry.
It is, however,
disproportionately
important in certain
places, particularly
Scotland, places
that, again, are
going to matter a great deal.
And since a big part of Brexit,
a big part of the philosophy
of Brexit, is we left behind...
Take back control.
Take back control, but also
that we left behind and betrayed
communities that couldn't
compete like London could.
Then, fishing
communities, and the fish
becomes a template for what
you're trying to achieve.
The government wants
to show a win on fish.
On the other hand, it is
also, in one respect, its best
negotiating card, because
this matters hugely,
the issue of access to
Britain's territorial waters,
certainly up to 6
miles, I think it
is, is a huge issue
to French fishermen,
to Spanish fishermen.
And they are very
worried about it.
And they want this brought
right into the trade talks.
And so it is something that
Britain could negotiate with,
if it's prepared to
disappoint the fishermen,
its own fishermen, a bit.
And that was the question.
Because it's also the
case that much of the fish
caught by British fishermen
is actually sold in Europe.
So unless we're all going to
start eating Pollock ourselves,
they do actually need access
to the European markets.
It's about 80 per cent.
Now, is this a cod that
doesn't have fins, by the way.
So, in fact, the fish
come right up here,
because the fish are going to
be front and centre, as it were,
of the negotiations.
Because it's this question of...
One day we're going
to call one of these:
you've had your
chips, haven't you?
I can see it already.
Oh, God.
Not...
over my dead body.
But anyway, so this
question trading off
sovereignty and control
over access to EU markets
is really what the whole
thing is going to be about.
But on the other hand,
as you were saying,
that's actually,
in numbers terms,
a very small part of
the British economy.
What is far bigger in
economic terms, but also
as politically potent is
the manufacturing areas.
So we've got this,
you know, for example,
the car manufacturing
industry in the UK,
which is a huge employer in
the Midlands and the North,
the areas the Conservatives
just won successfully from
the Labour party.
They want to hold those seats.
This is no small part of their
political task in the next
and four and a half years.
But if you take back
control without compromise,
you really are
jeopardising those jobs.
And you're jeopardising
employment in those politically
sensitive areas.
What sort of a
trade off is this?
It's kind of bonkers, no?
Absolutely.
And it is very
striking, by the way.
I mean, some of
the comments that
were being attributed to
quite senior Conservatives,
saying, well, we can't worry
about legacy industries,
by which they mean the cars.
And the British
automotive sector
is on a downhill slope anyway,
which may or may not be true.
I mean, certainly the case
I can't imagine Japanese car
companies building any
new models in Britain
unless something
changes dramatically.
But you can't just go
wiping out whole sectors.
I mean, 150,000 jobs.
It's hundreds of
thousands of jobs.
Dependencies.
Fish is a really
interesting topic,
because for an economist,
this is a no brainer,
you sell out the
fishing industry
to get a better deal for the
rest of the economy, which is,
of course, what happened when we
joined the EEC, as it was then.
Which is why it's a political
issue around which so
much resentment has built up.
Imagine the resentment that
would build up politically
if you destroyed the car
industry in this country.
Yeah.
There is the issue of
regulatory divergence.
But no company that is selling
primarily into the European
market is going to diverge
from EU rules anyway,
or put itself in a position
where it could find tariffs
slapped on it because it's in
receipt of state aid, or...
it would be judged illegal
under European terms.
So there is an aspect to which
the market might settle this
a bit, but, yeah, I mean,
there are some really,
really horrible trade...
I mean, someone said to me a
while back the trade policy
is something that the UK has not
had to think about for decades.
Because we've been
part of a huge trading
block, and they've taken care
of the negotiations for us.
And they've been a
big guy in the scene.
So anyone in the
EU's negotiating
with this side from
America and China
is that the EU has
the upper hand.
Trade policy is
always corrosive.
It always leads to big fights.
There's always
somebody losing out.
There are always
interest groups who
are against free trade
as well, full stop.
So trade policy is going to
become a hot issue in all kinds
of ways that people
haven't got...
and we sorted of
a couple of them.
There'll be other
ones that hadn't
occurred to us at all that
will become really, really
difficult.
So what about the UK
services sectors then,
including, of course,
financial services, which
is a huge earner in
terms of the tax take
and all the rest of it?
Does that also come into
this very early part
of the negotiations?
Sajid Javid, the chancellor,
has been talking very tough on,
we will diverge, we will divert.
You've even seen Mark
Carney, the outgoing governor
of the Bank of England, start
to say, OK, well, if Brexit
is really happening it might
be in the City of London's
interests to divert.
So what am I going to draw
for the City of London?
Should I try for the gherkin?
Go for a gherkin, yes.
I'll go for a gherkin
while you chat.
There we go.
It's not a gherkin without fins.
I'm going to do
contouring on my gherkin.
So, again, one of the issues
is that the City of London
is not a homogeneous unit.
Different people have
different interests.
It's not even all in London.
No.
And yet, there is one
message coming out.
And it is a message
that partly has
been led by the Bank
of England, which
is to say, we don't
want regulation
- we have to be the regulator.
We have to set policy,
and, therefore,
we can't have others regulating
for our service industry
of our financial services.
As a result of
which it's very hard
to see how you get much more
than basic equivalence in which
there's sort of
mutual recognition,
but liable to cancellations
with 30 days' notice, I think.
It's very hard to see what the
UK is gunning for in this area.
And it's, I think,
to some extent,
relying on a view that
says the City of London,
Britain's financial
service industry,
is so strong and so powerful
that we can risk this as well.
We can survive.
Because we carry too much clout.
I think the concern
that people have
is not that the financial
services industry could fall
apart in 2021, but that over
time power and influence
just moves.
And seeps away
other global cities.
European capitals
have made a number
of the major financial
services companies open hubs
within the European Union.
At the moment those
hubs are quite small.
But they starting actually,
would be like this bit,
if you will, your trading, or
whatever it is, coming over,
it is a huge issue about
which the government
has said nothing very notable.
And yet it has been the
engine of British growth.
OK, so what we're
concluding is that, really,
the first half of
this year is where
the action is going to be.
Are we?
No, no.
We're not.
I think it's where the...
Where the noise is going to be.
It's where all of the shouting,
and grape shots, and anger
will be.
But then after June, where
it's too late to extend again,
you're still in negotiation.
But you think that's
still in play.
You think the
extension is going...
Well, the only reason I say
this is because it's politics.
And we have a UK prime
minister who gets away
with stuff, essentially.
And how is it in
anybody's interests,
either the UK or
the EU, if we end up
in this kind of no man's land?
And so that's why my
feeling is that it actually
does become clearer,
if not totally clear,
by the midpoint
of the year, what
the costs and benefits are.
I do think you have
to factor in, though,
just how powerful and strong a
position Boris Johnson is in.
He has just won an election.
He's got a very big majority.
He's got a party in no
great mood to defy him.
We've seen a little
bit of defiance
this week over the
issue around Huawei.
But they're not in a mood
to have a fight with him.
They broadly agree with him.
He's going to be there longer.
If you were looking at which
European leaders are going
to be in place in five
years time - well,
four and a half years time -
well, Boris Johnson you'd bet
would be there.
...will be gone.
Macron, who knows?
So actually he's quite
stable at the moment.
And he's able to use that
stability for a while
until things start to go
wrong down the horizon.
So the thing is, Robert, clearly
he's got a majority of 80.
He's looking more secure
than any prime minister
that we've been used
to in recent years.
But that's not
saying much, right?
And the situation's
quite volatile.
And also, if you look at the
UK's other important alliances,
you know, it's quite
difficult to say, for example,
that our relationship with...
I wondered where you
were going with this.
That our relationship
with the US
isn't looking all that brilliant
in the UK at the moment.
The tensions over
the UK decision
to let in Huawei to
run our 5G network,
for example, has
really annoyed America.
The British government is
supposed to want this great US
trade deal as well.
Nothing in terms of the
vision of where the Johnson
government is actually
taking us as an endpoint
is as secure as it seems
at the moment, I would say.
I think that's right.
And I think if there's one other
area where the rubber has hit
the road, or whatever the
appropriate metaphor -
it is Anglo-US relations,
because not only has Britain
pushed back against some really
ferocious lobbying by the US
about whether it lets Huawei
into the 5G phone network.
And I mean, it was really.
And I think the
government was stung
by the scale of the
opposition, and could
blowback within cabinet and
among often quite loyal people.
So I'm going to start with that.
They've got the
digital services tax,
which is due to be
introduced in the budget.
It's just coming into effect
from the budget, which is
going to hit the tech giants.
And, again, that led to
threats from Steve Mnuchin.
There'll be retaliation on
autos if the UK does that.
So there are all these ways
in which we have the capacity
to upset the US.
And for some people,
the US trade deal
was the prize of Brexit.
Having said which,
it's very striking
that you hear people
in government talking
about the serious
members of government
understand that it's
the European trade
deal that matters.
That all this talk about the US
is great, and it's wonderful,
but actually, it's all
about getting this one.
So the development of the
Anglo-US relationship over
the next year is going to be...
it's going to be absolutely
fascinating to watch.
But then, again, US
is in an election,
which is never the
great place to be
having these conversations.
No, indeed.
But what I would say is
that even though I wouldn't
necessarily bet
against you on us
keeping to that end
of December, 2020 date
for having done a
final deal, or going
over that threatening
cliff edge again,
I think there is a lot
of instability, actually.
And there are still a lot
of things up for grabs.
So what you're saying is, I'm
not going to bet against you,
but I'd like it to be on record.
That's right.
That is exactly what I'm saying.
But I have got something
for you though.
I've got your Brexit dividend.
You've got one.
We have got...
it's not one of
the special ones.
But anyway, 50p,
your Brexit dividend.
With friendship
to all, isn't it?
Peace, prosperity,
and friendship to all.
Yeah.
It's been a great journey.
Got to get one of those.
I'll use them as a pound.
