When you have a commercial deal of indefinite duration with somebody called Deal Number One, you can always seek what, from your angle, is a better deal, Deal Number Two. If your counterparty is unwilling or unable to change the agreement you can simply give up and soldier on with Deal Number One. This is what David Cameron undertook in his grand tour of European capitals prior to the 2016 Brexit referendum and he commended the deal he was offered to the electorate.

It is foolish to withdraw from Deal Number One before you secure agreement on an improvement. If you also cannot make up your mind about what you want in Deal Number Two, your counterparty will be puzzled, perhaps angry and the negotiations will not go well.

Common sense dictates that when a deal is re-negotiated at the request of one party the status quo ante should be preserved by that party as the fall-back position. The exception has been Brexit: the UK has chosen to cease its membership in the EU’s single market and customs union on 29 March next, the second anniversary of its notice to terminate. Discussions about the shape of Deal Number Two rumble on, mainly within the UK’s governing Conservative party, whose focus on negotiating with itself even provoked the German chancellor to ask publicly ‘‘What do you want?’’ There has finally been a response.

The EU-27 are reluctant to contemplate Theresa May’s version of Deal Number Two, the Chequers plan finally unveiled on 6 July last, 15 months after the UK’s Article 50 resignation letter. This letter gave what is effectively irrevocable notice of the UK’s unilateral exit from Deal Number One.

The negotiations on a successor have made no meaningful progress and the clock will run down over the next few months. To complicate matters the Tory party is split on the Chequers version, rejected anyway by the EU-27 and unlikely to command a majority in the House of Commons. There is now a dawning realisation in the UK that no-deal is a really bad deal. The status quo ante, in the form of Deal Number One, was maybe not so bad after all, and the Chequers plan, apparently doomed, sought to retain its more attractive features.

Possible outcomes

There are just two possible outcomes to the current discussions, which are about the draft withdrawal agreement: it will either be agreed, leading to transition and no change until end-2020, or it won’t, leading to a no-deal crash-out next March. It must contain a backstop solution avoiding a hard border in Ireland and must contain some language (the so-called ‘‘political declaration’’) about Deal Number Two, the crucial long-term trading terms between the UK and the EU-27.

The other elements in the withdrawal package (cash owed by the UK and citizens’ rights) look as if they can be resolved. A no-deal outcome can be avoided with a kind of super-fudge: agree the money and citizens’ rights, agree that the eventual deal avoids a hard Irish border without saying how and append some aspirational waffle where Deal Number Two should be, in the political declaration. This avoids a no-deal outcome, automatic and self-implementing if there is no withdrawal agreement, and the can (several cans, in truth) can be kicked down the road into the 21-month standstill period which has already been offered by the EU-27. This would be seen as blessed deliverance by many in UK politics and would permit the continuation of the internal civil wars in both Tory and Labour parties for another while. For the EU, it would avoid the immediate no-deal nightmare which would impose serious economic dislocation.

Sir Ivan Rogers was a senior UK diplomat specialising in EU matters and quit (or was eased out) early in 2017 to applause from Brexiteers.

Rogers thinks that the super-fudge is a bad idea for the UK but also for the EU. It would defer a long list of difficult issues into the 21-month transition period, including the Irish border, without offering any guarantee that they would be resolved. The damage to the UK and European economies, from firms relocating at heavy cost, would likely be incurred anyway as contingency plans are activated. To achieve “a stable, amicable post-Brexit settlement, not an endless toxic running battle” he writes, requires the avoidance of no-deal, but not through a super-fudge: the withdrawal agreement needs to outline a clear vision of the final destination.

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