Bill Jamieson: Brexit could make UK federal state with co-PM Sturgeon

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Brexit could lead to a recession, foreign takeovers of UK firms, the resignation of Theresa May, a snap election, and a minority Labour Government propped up by the SNP, with Nicola Sturgeon touted as co-Prime Minister, writes Bill Jamieson.

As if the two-year Brexit nightmare has not been enough, we are poised to enter one of the most convulsive periods in UK political history.

Nicola Sturgeon in Downing Street? The next six months will be one of the most convulsive in political history (Picture: Daniel Leal-Olivas/AFP/GETTY)

Nicola Sturgeon in Downing Street? The next six months will be one of the most convulsive in political history (Picture: Daniel Leal-Olivas/AFP/GETTY)

Such has been the intense focus on the immediate crises to hand – the daily cliffhanger of Theresa May’s survival; the deadly pendulum of the 48 Tory MP letters that would trigger a leadership battle; the gridlock of EU summits; and the Irish backstop wrangle – few have felt able to look much further than tomorrow, still less the day after.

But raise our eyes we must to what could unfold over the next six months. We are heading in such a tumultuous direction that by April of next year the political and economic landscape may be unrecognisable.

Prepare for a fusillade of possibilities: a last-minute Brexit ‘deal’ that tears the government apart; a bitter referendum to agree the terms; the resignation of the Prime Minister and a Conservative leadership election; the onset of recession and a rise in unemployment; a general election in sight; Scotland’s First Minister Nicola Sturgeon as a critical power broker, and a major shift towards a federal Britain as divisions intensify.

All this within six months – the very fact that such a battery of events is not just within the realms of possibility but now imminent speaks to the febrile state we are in.

Here’s how matters could unfold. Amid continuing gridlock over a Brexit deal with the European Commission, anxieties mount to fever pitch over a massive dislocation to our trade and economy.

Only yesterday came a chilling warning that Britain will “pay the price” of a no-deal Brexit because complicated new border controls may not be ready in time. A report from the National Audit Office declared that thousands of UK exporters did not have enough time to prepare for new border rules.

READ MORE: Nicola Sturgeon says no-deal Brexit now most likely outcome

Criminal gangs could exploit any border weaknesses, it added, and queues and delays were likely at border crossings. The scope for disruption is massive, and by comparison the Irish backstop issue is a fleabite. Some £423 billion of trade crosses UK borders every year, much of that is with the EU or goes onto other destinations via the rest of Europe. And more than 200 million people also cross the border.

Assurances from the Prime Minister that a Brexit deal is “95 per cent complete” are reassuring no-one. Faced with disruption to basic essentials such as food, medical supplies and all manner of manufacturing components, stockpiling will get underway in earnest.

The Centre for Economics and Business Research (CEBR) said last month UK firms will have stockpiled an extra £38 billion of goods by the time Brexit happens, claiming this was a factor in recent growth in gross domestic product (GDP). In Scotland, the country’s chief economic adviser Dr Gary Gillespie this week echoed the CEBR’s warnings. Stockpiling, he said, may give Scotland’s economy a short-term boost, but it will have a negative effect overall, with the initial fillip “more than offset” by a subsequent slowdown.

Arguably more worrying is the prospect of an investment freeze as companies, driven to desperation by the deadlock in Brussels and paralysed by uncertainty, cut their expansion plans, catalysing an intensifying investment ‘strike’.

Fears of a ‘no deal’ chaos force the Government into further concessions with Brussels. Faced with the likelihood that Parliament would vote down a Brexit with no agreement, Mrs May has no alternative but to seek a deal.

READ MORE: Eva Oer: Despite Brexit, here’s why Germany and EU still need the UK

The final terms, struck in typical Brussels fashion in the early hours of the final day and couched in the near-impenetrable language of ‘Euro fudge’, speaks of ‘high regulatory affinity’, an extended transition period with an ambiguous end date and the Irish border question parked with a tripartite inter-governmental commission chaired by a senior Taiwanese UN official with extensive experience in human rights. The final document is hailed as a victory by all sides but in the Commons, there is uproar as the Prime Minister pleads for support. This is only secured by a commitment to hold a referendum – as in 1975 – on the final terms.

The Conservative Government is irrevocably split and, in the ensuing campaign, ‘Leavers’ are bitterly opposed to Mrs May’s deal. But the greater mood is one of exasperated relief that an end to two years of Brexit wrangling is at last in sight. There is a majority ‘Yes’ vote for the deal.

Normality restored? Not at all. The air of continuing crisis is enhanced by the onset of capital flight and recession, with a sharp fall in sterling sparking fresh fears of inflation.

A sharp fall in the stock market is only cushioned in time by a spate of bargain-hunting foreign takeovers, French and German companies to the fore.

The Prime Minister, relieved that she has got a Brexit deal, resigns. A succession battle erupts, the emerging victor (after several rounds of voting) being a female junior ‘dark horse’ minister who had the benefit of attracting the least vicious condemnation. That she had been a former ‘Leave’ supporter only added to the irony: a Brexit vote overseen by a ‘Remain’ Prime Minister succeeded by a ‘Leave’ supporter overseeing Brexit In Name Only. The leadership battle is followed soon after by a general election. The turnout is low due to a combination of voter exhaustion and a marked reluctance of traditional Conservative voters to turn out. Scottish Tories suffer a near wipeout.

Labour secures the largest number of seats and has to rely on a Confidence and Supply arrangement with the SNP – an agreement less formal than a full-blown coalition but one that allows a party to hold power, supported by the smaller party on the budget and any votes other parties propose to bring it down.

An enhanced SNP presence leads to calls for more formal SNP representation at Westminster in a coalition, with Nicola Sturgeon touted as co-Prime Minister. This is countered by calls for abolition of the House of Lords and constitutional change ushering in a federal UK.

All this between now and April 2019? Good things, of course, might happen. But I’m stuck to think of one.