Boris’s Brexit

Political betting markets now put the chance of a no-deal Brexit at roughly one-third. But, regardless of the reckless promises to Conservative Europhobes that made Boris Johnson prime minister, an orderly, negotiated Brexit will be the favored option for a political libertine whose only consistent principle has been inconsistency.

LONDON – Now that Boris Johnson has achieved his lifetime ambition to become the United Kingdom’s prime minister, the tragicomedy of Brexit is approaching its climax. While the rest of the European Union has viewed this with barely disguised horror, there is good news and bad news in Johnson’s apotheosis.

The bad news is that the “no-deal” withdrawal from the European Union that Johnson advocated to win the leadership of the Europhobic Conservative Party could cause a sudden stop in economic activity comparable to the disaster that followed the failure of Lehman Brothers in 2008. Although this business breakdown might initially affect only trade-related businesses in Britain, and produce some kind of UK-EU compromise within a few weeks or months, we learned in the 2008 financial crisis that even a brief interruption of normal commercial relations in one part of the economy can reverberate for many years.

The good news is that Johnson is a far cleverer and more adroit politician than his predecessor, Theresa May. And pessimism about Britain’s prospects has become so widespread that any Brexit outcome other than a no-deal rupture would now be a positive surprise, causing an economic resurgence not just in Britain but across Europe. Yes, Britain is bound to suffer in the long run from any version of Brexit. But in any version of Brexit other than “no deal,” the short-term damage would be offset by a rebound in business and consumer sentiment as the risks of total breakdown were suddenly replaced by the certainty of a lengthy transition period in which Britain’s economic relations with Europe would remain almost unchanged.

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© Project Syndicate

© Project Syndicate

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