Theresa May’s pyrrhic victory

The British election called by Prime Minister Theresa May for June 8 will transform the outlook for Britain’s politics and its relationship with Europe, but not necessarily in the way that a vastly increased majority for May’s Conservative Party might seem to imply. The scorched-earth defeat that conservative eurosceptics expect to inflict on Britain’s internationalist and progressive forces was symbolised by the Daily Mail headline on May’s election announcement: “Crush the Saboteurs.” But June’s resounding victory could ultimately lead to an even more stunning reversal, like Napoleon’s hubristic march on Moscow after he had destroyed all opposition in Western Europe.Britain’s pro-European progressive forces could still snatch victory from the jaws of defeat for three related reasons.First, by bringing forward the British election, May has effectively extended the deadline for Britain’s withdrawal from the European Union from 2019 until 2022. The early election makes it inevitable that Britain will formally leave the EU in March 2019, because May will no longer face even the theoretical possibility of parliamentary opposition. But it also allows Britain to accept a long transition period after the 2019 departure deadline, so that businesses and administrative systems can adjust to whatever terms are agreed by then.British business lobbies, as well as the government officials tasked with implementation, have been pressing for this transition period to be as long as possible. The EU, however, has insisted that during the transition period all of the current obligations of EU membership must continue, including budget contributions, free movement of labour, and enforcement of EU legal judgments.Until the election was called, it seemed almost impossible to reconcile the business community’s need for a long transition period with the insistence of conservative eurosceptics on a complete and immediate break with the EU. A crushing election victory will give May the necessary authority to negotiate a long transition, despite the objections of anti-EU extremists, and will persuade more moderate eurosceptics that, with Brexit now guaranteed, the precise timing of various EU obligations is less important.As a result, although Britain will formally cease to be an EU member by March 2019, very little will change in Britain’s economy or way of life by the time of the next general election in 2022. In this sense, May’s decision to call an early election is a setback for extreme eurosceptics, who might otherwise have forced her to break completely with Europe by March 2019.This relates to a second reason why the imminent triumph for British eurosceptics may end up a pyrrhic victory. Whereas the early election will delay economic changes, it will greatly accelerate the transformation of British politics.Britain’s main opposition Labour Party has been in its death throes since 2015, but could survive in its present zombie condition until a general election was called. Because the next election was expected in 2020, it was possible that some unforeseen development in the three years might allow Labour to revive. By bringing the election forward, May has brought forward Labour’s disintegration as well, and virtually eliminated the possibility of its revival.When the Labour Party collapses after its defeat in June, a realignment of progressive British politics will become almost certain. This realignment, uniting disillusioned Labour politicians and voters with Liberal Democrats, Greens, and perhaps Scottish and Welsh nationalists, is likely to produce an opposition that is much more effective than May currently faces, even if it has fewer parliamentary seats.By the time of the next general election, most likely in 2022, Britain’s internationalist and progressive political forces will have had five years to prepare themselves to oppose May’s conservatism and English nationalism. By that time, the Conservatives will have been in power for three parliaments and 12 years. That is about how long it has typically taken Britain’s political pendulum to swing between right and left.Moreover, owing to the extended transition period for Brexit made possible by the early election, it will only be around 2022 that the full consequences of terminating EU membership come into view, together with the contradictions in the Brexit coalition between libertarian free traders and socially conservative nationalists and protectionists. Meanwhile, efforts to negotiate free-trade agreements with the US and China will have revealed the weakness of Britain’s bargaining position. As a result, public opinion about the wisdom of Brexit could shift substantially by 2022. In any case, the changing relationship with Europe will be the core issue around which Britain’s socially liberal and internationalist political forces can coalesce after their defeat.Suppose that, in the meantime, the EU continues its economic recovery. Suppose further that, after the French and German elections this year, a stronger Franco-German partnership drives the eurozone toward the closer political integration that is obviously needed for the single currency to succeed, whereas Denmark, Sweden, and Poland make clear that they have no intention of ever joining the euro. By 2022, British voters could well decide that re-joining a twin-track European Union is much more attractive than pleading for a junior partnership with the US, not to mention China. That is the third reason why Britain’s conservative eurosceptics could end up regretting their imminent electoral triumph. Whatever happens, the decisive battle in the war for Britain’s long-term future will not be this year’s easy victory for May. It will be the clash, five years from now, between nationalist conservatism and a new outward-looking progressive opposition. - Project Syndicate* Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy.