Bracing for Hard #BREXIT

Earlier today, the European Union (EU) formally filed suit against the United Kingdom in protest over the UK's Internal Markets Bill that, if used, will violate the Northern Ireland Protocol to the Withdrawal Agreement.


Few are surprised. The EU has been threatening legal action since the UK's Internal Market Bill was first published. The EU set September 30 as the deadline for the UK to withdraw the bill. Instead, the House of Commons passed the Bill. No action is expected in the House of Lords until December, but this is more about maintaining negotiating power than a climbdown.


Who was ready for this turn of events? Our PolicyScope Risk Monitor readers and customers who use the PolicyScope Platform to track Brexit. Both have been watching the daily, sometimes incremental moves made in London and Brussels....some of which never make it into the media coverage. We concluded weeks ago -- and told our Risk Monitor subscribers -- that the time had come to begin preparing for scenarios WORSE than a hard Brexit at year-end. Today's intensification confirms that analysis.


Here is how we analyzed our PolicyScope Platform data for our Risk Monitor subscribers last night (30 September 2020), just as Asian markets were opening.:The title for the Brexit section was "It's Too Quiet":

"Today's detail Momentum Measurement is worth a thousand words.  Regarding Brexit, policymakers were nearly completely all talk and no action.

The only really interesting moves were small but strategically significant. 

  • The UK and South Korea commenced talks on extending last year's Free Trade Agreement to cover technology and data issues.The move underscores the UK's commitment to craft alternative trading arrangements focused not only on 21st century economic sectors but also regulatory standards made in London rather than Brussels.


  • The UK also reached agreement with Norway regarding fishing rights.   Since the Norway/EU agreement on fishing rights remains the UK's preferred template for negotiations, some interpret the move as increasing the chances of breaking the policy logjam on this issue.  The move could easily backfire, however, by infuriating EU officials facing the reality that their September 30 for withdrawing the Internal Market Bill from Parliamentary consideration has come and gone without compliant action by London.

European Union officials formally remain silent.  Leaks from Brussels still take a strong line, indicating that policymakers continue to consider denying the UK an equivalence determination and, thus shutting out UK financial firms from European markets starting in January. Taken together, these moves look less like positioning for compromise and more like additional digging in to entrenched positions.".

A few hours later, the EU commenced legal proceedings.


It remains theoretically possible that a negotiated free trade agreement might still emerge in two weeks time. But the prospects dwindle daily. No easy answers exist here.


It is very true that, if implemented, the Internal Market Bill's provisions will constitute a derogation from the Northern Ireland Protocol to the Withdrawal Agreement (a treaty). The British government admitted this publicly weeks ago. Amendments requiring Parliamentary approval to trigger the provisions deliver political cover to the government. While the amendment in question does not specify the details, it is highly likely that any parliamentary action in London under the bill in question would include a formal process for leaving the treaty.


But the situation involves an additional element which is highly problematic. The EU's demand that the bill be withdrawn places a supranational organization....from which as a matter of law the UK has already withdrawn...in the position of demanding that democratically elected officials ignore their constituents. Tactically, the EU's demand could only strengthen the position of pro-sovereignty sentiment in the UK.


Strategically, the EU has placed itself formally in the position of saying a treaty obligation can never be superceded by democratically elected national officials. The ongoing struggle between the EU and the UK thus continues to reflect one of the great dramas of our day regarding sovereignty. For more on Brexit and sovereignty, please see our 2019 post (Brexit: How It Started:).


In the Western liberal tradition, individuals are sovereign. They LEND their sovereignty to elected officials every time they vote. Those officials can create legally binding treaty obligations on behalf of their citizens using their executive.authority. But the commitment actually comes from the legislature through the ratification process. Amendments and exits from treaty obligations also require legislative action.


Traditionally, even under international law, legislative action at the national level tends to supercede executive action. The outcome for the EU's legal case is thus far from certain. It will definitely spark intense academic interest.


At the practical level, no judicial process is going to resolve the impasse before year-end. The progress of the litigation, like the ongoing negotiations, seems likely to intensify entrenched positions rather than ameliorate them long after the Transition Period has expired.


Scenario analysts and geo-strategic strategists everywhere must now start incorporating into their risk models more adverse year-end and 2021 outcomes than just a no-deal end to the Brexit Transition Period.

The situation illustrates precisely how our Phase 1 platform delivers predictive analytics using data-driven techniques. Our patented process automatically found and delivered initial analysis regarding the situation. This left more time for reflection and higher order analysis.


Anyone using our Platform or reading the Risk Monitor can get ahead of the curve long before we deploy AI-driven trend projection. We do mean anyone. The system helps junior analysts become experts faster. When used by experts, the system helps people connect the dots faster using concrete, objective, transparent data. This helps generate better and more unique insights that avoid parroting the nonsense often heard in the echo-chamber media cycle.


When we deploy our training data to the machine learning context, additional acceleration in insight formation can be expected.

To learn more about how the PolicyScope ecosystem can help you and your team see around the corner and anticipate public policy outcomes more accurately, just click on the image on the right.


You can choose from Platform access to daily Risk Monitor analysis. The Platform includes white glove delivery that ensures customization and optimal performance for your specific interests from Day 1. Entities seeking enterprise-wide deployments via our API and customized dashboards should contact us directly via email.

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