We know that the Johnson regime wants a No Deal Brexit, and that Labour only opposes that subject to agreeing its own form of Brexit. But any form of Brexit would doom the UK to lengthy trade talks and related political turmoil in a situation where Brits can no longer live and work freely in 30 other countries or trade freely with the EU and other countries under EU free trade deals. A limited 'transition' or 'implementation' period merely sugar coats the pill: Brexit spells the end of freedom of movement for labour, goods, services and capital.
In this context, the prospects for new free trade arrangements are absolutely critical, and a key consideration is whether any UK government policies or party conference 'manifesto commitments' stand in the way of negotiations.
I've started a general list below, including policies that could either directly prevent a deal being agreed and those that could discourage businesses from a partner country actually investing in the UK or undertaking trade anyway:
- breaching the Good Friday Agreement - the US congress has already signaled that it will not approve a free trade deal with the UK that endangers the GFA;
- nationalisation plans - EU state aid rules already permit nationally owned assets (though rules on nationalising/subsidising railways are changing, for example) but Labour has said that it wants to nationalise a much wider scope of the UK economy and "rejects the whole principle of free trade";
- capital controls: the UK government might first introduce controls aimed at preventing the flight of funds resulting from policies that are not compatible with existing foreign investment or that will make the UK uncompetitive with other investment opportunities. Nationalisation plans would be a particular problem given the amount of foreign ownership of utilities and other formerly public assets. There must also be concerns that foreign nationals will want to get their assets out when they wish to leave (and before any capital controls come in). Capital controls are also part of a country's monetary armoury for numerous other reasons - especially when an economy is teetering on the brink of disaster. Capital controls are excluded in US free trade deals and would likely be contested in international arbitration, subject to the IMF's power to require them to safeguard its resources. We've heard nothing from Johnson's crew on this (although the Tories have been traditionally very reluctant to introduce meaningful constraints on dodgy funds flows and Johnson cares even less about the rule of law), but John McDonnell has tried to assure people that Labour won't introduce capital controls while talking about plans that effectively require them. Problem is that governments may not warn people before introducing capital controls for obvious reasons...;
- breakdown in the rule of law - traditionally not associated with the UK, but that reputation has been vastly undermined by the antics of the Conservative Party during the past four years and particularly the Johnson crew during the Leave campaign and over the past few weeks. Threats not to implement customs checks or to withhold payments due to the EU under budgetary commitments are particularly concerning. Nobody wants a deal that involves constant disputes and endless international arbitration proceedings; and businesses won't trade in violation of terms where that lands them in hot water or isn't otherwise in their interests.
Clearly, any government also has to be careful not to lose sight of many other factors that contribute to people and businesses' assessment about the relative attractiveness of doing business in a country more generally - such as unusual or extraordinary taxes on income, property and transactions.
