Introduction
“What will the UK government’s strategic priorities be on 1 July 2019?”
The scenarios were developed by Aleph Insights and Legatus Global using a structured, collaborative, driver-based scenario generation method. They are not forecasts, but narrative scenarios. The narrative scenarios approach is a tool that is useful for contingency planning and the collaborative identification of key concerns, opportunities and threats. The scenarios are not, and should not be, assessed in terms of their probability. Similar scenarios were developed a year ago in the immediate aftermath of the Brexit referendum result. These should be read in conjunction with our one year review of the original scenarios. We will produce follow-on scenarios a year hence.
In the opinion of the scenario developers, the key drivers of the UK’s strategic priorities in 2019 will be: UK government and party politics; the UK economy and economic policy; EU negotiation progress; progress on international deals; UK society and unrest; UK regional unity; UK-US relations; external strategic threats; international terrorism; and the occurrence of crises. Each of the following scenarios is built on a slightly different set of assumptions concerning these drivers, and is set in the middle of 2019.
The first scenario is the 'baseline', corresponding to a set of assumptions that (in the view of the developers) are most plausible. However, it is not a forecast, and should not be considered in any sense 'likely'. The other four scenarios represent plausible alternatives based on changed assumptions. These should be assumed to follow the baseline where not explicitly stated otherwise.
Baseline Scenario - Stuck in the middle with EU
A transitional framework is agreed. Source: pixaby.com (user: dimistrisvetsikas1969) |
Theresa May continues as Prime Minister. She has gained credit in some quarters for directing the UK’s precarious avoidance of the cliff edge, but she has made far more enemies within her own party for signing up to an undeniably ‘soft’ Brexit. She is kept in place by a combination of inertia, the lack of an alternative unifying figure within the Conservative party, and a fear in the Tory ranks of electoral defeat. Aside from Brexit related law, her government have enacted no major legislation over the last two years.
The Labour party, in contrast, appears relatively unified. Jeremy Corbyn’s opponents were neutered by his electoral success in 2017. He remains popular among young voters, public sector workers and the economically disenfranchised. The Labour party is consistently out-polling the Conservatives, a number of by-elections have gone in their favour and they are widely predicted to win the greatest share of the popular vote at the next general election. Labour’s strategy is geared around forcing a vote of no confidence and triggering an election. Despite the attempts of a cross-bench group of centrists spearheaded by Vince Cable, the leader of the Liberal Democrats, parliamentary business is now defined as a bitter war of attrition.
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Flu epidemic highlights under-resourcing of public services. Source: freestockphoto.biz |
Against this backdrop, the UK economy has been remarkably resilient. A quarter point rise in interest rates in response to the inflationary effects of a persistently weaker pound has had no discernible impact, either positive or negative. GDP growth remains steady at around 2%, but household debt is higher than 2008 levels. Energy prices continue to rise in real terms, leading to a drop in disposable income, and the public sector deficit has not been reduced. The full economic impact of the UK leaving the EU is yet to be understood.
Overseas, the UK’s attempts to secure major trade deals with non-EU partners have been frantic. Negotiations with New Zealand, Australia, Canada and Japan are in their advanced stages, but nothing concrete has emerged. This is primarily due to the ambiguities resulting from the inconclusive status of the UK’s relationship with the EU, and the uncertainty regarding Britain’s sovereign right to strike deals while still being integrated with the customs union. The UK’s main ally, the United States, is preoccupied with domestic matters. Despite Donald Trump’s prior vocal support of Brexit, his administration has shown no tangible signs of seeking to establish an enhanced trading arrangement with Britain. There has still been no state visit to the UK for the President, and his personal relationship with Theresa May is said to be cool.
Tensions between Arab Gulf neighbours have intensified and the deepening instability threatens the UK’s access to some of its military bases in the area. British diplomats have been engaged in shuttle diplomacy to prevent its various allies in the region from escalating the situation. High levels of migration through North Africa are maintained, although the problem is having a much greater effect on the EU than the UK. One of the few positive aspects of the EU-UK relationship is the Royal Navy’s substantial commitment to anti-trafficking missions in the Mediterranean. ISIS has lost large amounts of territory in Syria and Iraq, but Western security services are particularly worried about ‘bleedout’ from the area following the terrorist group’s loss of any presence in both Mosul and Raqqa. Russia has been seeking to exploit divisions within the EU and has increased its unofficial support of far-right groups in Europe. President Macron publicly accused the Russians of launching the ‘bonne annĂ©e’ malware attack, which targeted a number of French energy companies at the beginning of 2019. UK companies were also affected and disruptive cyber attacks against British institutions and companies have become more commonplace.
Overall, the last two years has seen the UK expend a huge amount of political energy to achieve relatively little. The material changes in UK’s relationship with the EU are minimal, but the psychological gulf between the British Isles and Europe has widened; there is far more than the channel which now divides us. At the same time, the country has failed to become the nexus of a global trading network that was envisaged by some Brexiteers. Politically rudderless, Britain feels vulnerable. Everyone is thankful that for now the waters seem still and the ship remains becalmed.
Policy Implications
Most of Britain’s diplomatic effort has been concentrated on the Brexit negotiations and trying to establish the basis for free trade agreements with countries outside the EU. Any spare overseas political capital has been spent on trying to prevent key allies in the Gulf from becoming embroiled in a bitter feud, or worse, a military conflict. At home, the focus has been providing the security services with the resources and the powers to tackle the threat of jihadists returning from Syria and passing on their skills to other extremists.
Scenario 2 - Borderline
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A vacuum persists at Stormont Source: wikipedia |
In order to reconcile key elements of her disjointed majority, in spring 2018, Theresa May gave a speech which appeared to indicate that Northern Ireland would indeed have a hard border with the Republic. This speech, along with the simmering hostility over the ongoing failure to reach an agreement on power-sharing, led some dissident Republican groups to escalate the levels of violence in Northern Ireland. A mortar attack against an Army barracks in County Antrim killed four soldiers and resulted in the threat level for Northern Ireland-related terrorism being raised to critical, meaning an attack is expected imminently.
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Violence erupts during marching season Source: flickr (user: Paul Townsend) |
Northern Ireland dominates the UK government’s domestic agenda and the spectre of the Good Friday agreement unravelling has come to overshadow Brexit negotiations as well. The key issue throughout the Brexit talks has been the border issue. Numerous options have been proposed, but the divided parties in Northern Ireland have not reached a consensus about any of them. The lack of stability in British politics has made the UK an unreliable negotiating partner. The EU while frustrated, has been keen not to exacerbate the volatile situation. As a result, UK-EU talks have made little progress and, given the risk of further violence, a request to extend the negotiating timetable by eight months has been agreed. As we approach the halfway stage of this extension, the UK is no closer to being able to agree its own position on Brexit, let alone conclude its negotiations with the EU. The continued uncertainty has pushed the EU to issue an ultimatum, stating that the negotiations will not be extended again. The likelihood of the UK achieving ‘no deal’ seems higher than ever.
Policy Implications
Scenario 3 - Two tribes
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RAF begins airstrikes against Assad regime targets Source: dvidshub.net (user: Staff Sgt Perry Aston) |
Paradoxically, the UK’s involvement in military operations against the Assad regime coincided with an increase in the number of ISIS-inspired terrorist attacks, even though Assad and ISIS are in conflict themselves. A hired van was driven onto a level crossing by an individual and succeeded in derailing a passenger train, leading to the death of several commuters and many more casualties. An uploaded video recorded by the van’s driver prior to his death presented a confusing justification, which seemed to suggest the UK’s policy in Syria was killing ‘good muslims’, even though ostensibly Britain’s strategy was designed to protect the civilian population from attack. A number of high profile plots have been subsequently disrupted by security services.
Immediately after the initial US strikes on the Assad regime, Vladimir Putin called the American decision “unhinged”, and said that Russia would take action to protect its allies from the “actions of a wild animal”. Russian attempts to table a draft UN Security Council Resolution to condemn the US attacks and initiate a UN investigation into America’s infringement of Syrian sovereignty, were quickly thwarted by lack of support among the fifteen members of the council. President Putin ordered new Russian ground troops into Syria in late 2018. He made it clear that these forces would be embedded with their Syrian partners. Two months after the Russian deployment, an RAF mission targeted Syrian forces that were alleged to be shelling a rebel held village. Media reports quickly reported that Russian spetsnaz were among the casualties. A day later the Russian Defence Ministry confirmed that three Russian military personnel were killed during the attack. Russian politicians were splenetic in their criticism of the UK, but there was no direct military confrontation.
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City of London brought to a standstill by cyber attack Source: flickr (user: kloniwotski) |
The revelations had an effect on UK-EU relations, which were already tense following European divisions over the legality of military action against the Assad regime. The Brexit negotiations were fractious, confrontational and driven by politics not pragmatism. The final deal, struck in March 2019, resulted in the UK leaving the EU under a settlement that is unfavourable to both parties. The access that the UK now has to the single market, is on terms barely more preferential than the WTO baseline. The overall agreement is ill defined and experts agree that its long-term implications will depend on how the deal is interpreted and implemented. The markets have not reacted optimistically. Throughout negotiations, the pound became increasingly weak. Inflation has risen sharply, interest rates are higher and GDP growth has stalled. The EU has begun aggressively to market Frankfurt as the ‘new London’ for European financial services. The cyber attack on the London Stock Exchange did nothing to calm the nerves of city investors. In Scotland there has been a resurgence in SNP support and another referendum looks on the cards, with polls pointing to a vote in favour of independence.
In this scenario the UK is preoccupied with its intervention in Syria and its growing enmity with Russia. The relationship with the EU has become acrimonious and the negotiation of Britain’s exit from the EU resulted, if not in it having gone over the cliff edge, at least with the country tumbling down a steep and rocky hill. The economy is damaged and the future of the Union hangs in the balance.
Policy Implications
Helping UK businesses adjust to dramatically reduced access to European markets and supply chains has also become a significant challenge to be met by government. While the Scottish independence referendum is imminent, government departments have been inhibited from conducting any large scale planning for the potential division of the United Kingdom.
Scenario 4 - Which side are you on?
Theresa May was blamed for her mishandling of the original deal, and her colleagues accused her of not consulting with them in the first place. The Prime Minister was forced to resign in September 2017. Following a leadership contest, Philip Hammond was elected as leader of the Conservatives and became the Prime Minister in the autumn. He was able to garner enough votes by positioning himself as both ‘business friendly’ and ‘a safe pair of hands’. However, the contest exposed the strong divisions that were present in the Conservative party on the issue of Europe. He made a number of enemies within his own party by clearly signalling his intention to pursue a course of ‘soft Brexit’. In contrast, his appointment was welcomed by business and European leaders, a fact that was not ignored by the tabloid press.
The new Prime Minister quickly faced a political crisis related to his acceptance in principle of the UK’s obligation to pay a severance settlement relating to outstanding financial commitments ‘owed’ to the EU’s various institutions. This prompted fury among his own backbenchers, some of whom publicly stated that they had ‘no confidence’ in their leader, a thinly veiled threat in the context of his extremely slender mandate. Anonymous briefings from somewhere within the upper ranks of the Tory party suggested the government was intending to reach an agreement in the “low tens of billions” for the European ‘divorce bill’. When the Prime Minister refused to heed the Eurosceptics calls to withdraw his intention to honour the divorce bill, some of them went further, suggesting they would rather face a general election than be “held hostage” by the EU.
After consulting with the other opposition parties (and, according to the rumours, some Tory ‘kamikaze’ rebels), Jeremy Corbyn put down a motion of no confidence. Following abstentions from the DUP and a handful of committed Tory MPs, Philip Hammond’s government fell in December 2017 in a political drama christened the ‘winter of malcontents’.
The Conservative campaign was divided and Philip Hammond cast a moribund figure. Labour and Jeremy Corbyn, were unable to rise to the heights of enthusiasm seen in the June 2017 election, but they sensed their moment and at least presented a united front. The SNP recaptured some ground from the Tories, the Liberal Democrats took seats in the Southwest and the Conservative vote stayed at home across the midlands and the North. Neither of the two main parties were able to match their share of the popular vote from the previous election, but the Tories share was the lowest it had been since the 2005 election. The distribution of votes meant that the Labour party won a majority of 10 seats.
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Jeremy Corbyn elected Prime Minister Source: wikipedia (user: Rwendland) |
The markets reacted very negatively to this set of announcements, and they remained depressed as details about the implementation of the policies emerged throughout 2018. Sterling was also weakened and currently sits at close to parity with the US Dollar and the Euro. The one glimmer through the economic storm clouds is Britain’s repaired relationship with the EU. Keir Starmer, the UK’s chief negotiator, pursued a pragmatic rather than ideological approach to negotiations. The Corbyn government was content to settle for a deal which saw the UK pay for access to the single market. Freedom of movement was preserved in all but name, under the the new set of UK immigration rules for EU citizens called ‘selective movement’.
Further afield, the UK’s efforts to secure free trade deals outside Europe have stalled under an unenthusiastic Prime Minister. The special relationship, has become ‘special’ only in terms of its mutual antipathy. Jeremy Corbyn frequently uses speeches to passionately criticise US foreign policy. President Trump has responded with typically colourful language via twitter, calling the Prime Minister a “communist loser” and “the man who made Britain ungreat (sic)”. Never has the Atlantic ocean looked wider or more turbulent. Britain’s involvement in military interventions in Iraq and Syria is drawing down, and its support and supply of equipment to the Saudi Arabian military has been ended. The UK’s stance has been feted by Iran and Russia, and Emily Thornberry, the Foreign Secretary, has been invited to Syrian peace talks involving the two countries.
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The Queen's death badly shakes the nation Source: wikipedia (user: Nhosko) |
In December 2018 Queen Elizabeth II died peacefully surrounded by her family at Balmoral, following a prolonged bout of pneumonia. The country underwent a period of genuine mourning. Sensing the national mood, Jeremy Corbyn publicly acknowledged the Queen’s public service. However, following King Charles’s ascension to the throne, the Prime Minister announced a low key review into the constitutional role of the monarchy and its current levels of funding.
The death of the country’s longest reigning monarch has had a major impact on the national psyche. The revolutionary spirit which swept Jeremy Corbyn to power seems to have abated. The economy is performing poorly and the UK’s traditional alliances have been undone. Many of the certainties of the past have gone and been replaced only by a feeling of great angst about Britain’s future.
Policy Implications
Scenario 5 - Waterloo
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Heinz Christian Stracher becomes far-right Chancellor in Austria Source: wikipedia (user: Thomas Prenner) |
In this context, the EU negotiations with the UK were initially dominated by European resolve to demonstrate the inviolability of the link between freedom of movement and access to the single market. This position started to crumble slightly under the weight of the refugee crisis. Spring 2018 saw record levels of migrants arrive on European shores via an increasingly unstable Libya, a trend that continued through the summer. Fissures in European attitudes towards border control widened throughout this period. The EU’s official line was that this was a problem that could only be dealt with transnationally, and that now more than ever was the time to show European solidarity. However, many countries retreated towards a position of arguing for greater sovereignty over issues of border control and immigration.
In September 2018, the right-wing nationalist Sweden Democrats came within a percentage point of overtaking the Social Democrats as Sweden’s largest political party in the country’s general election. The campaign had been been dominated by migration and the threat of Islamist extremism, after the Swedish security service, SAPO, made a series of arrests amongst a community of recent immigrants in a suburb of Stockholm. The arrests were said to have disrupted a ISIS-inspired group who were plotting an attack on a number of polling stations. The Sweden Democrats had stood explicitly promising a referendum on renegotiating the terms of Sweden’s EU membership and its inclusion in the Schengen agreement. The mainstream parties in Sweden have found it difficult to form a stable government, while continuing to exclude the Sweden Democrats from power (as recent political convention has dictated). In a sop to the rising tide of anti-immigration public opinion, the Swedish coalition government took the step of furthering its imposition of its own border controls, and announced a ‘temporary suspension’ of its Schengen membership.
The emotive issue of border control and immigration became a lightning rod for criticism of the EU across Europe throughout 2018. Italy, the Netherlands, Denmark and a collection of Eastern European countries have all called for increased autonomy over border controls and the right to limit freedom of movement. The ensuing panic in EU political circles has led to a reconsideration of the absolutist position on freedom of movement. In early 2019 the outgoing Jean-Claude Juncker admits that his successor will have to “solve the problem of free movement”.
This shifting attitude on the part of the EU hierarchy has benefitted the UK during its Brexit negotiations. EU unity has been badly undermined and many more of its member states seem closer to the Britain of 2016. Both the UK and the EU have been more conciliatory in tone than was the case at the beginning of the negotiations. The basis for a compromise on freedom of movement and access to the single market seems within reach. Britain’s hand has been further strengthened by its consistently resilient economic performance. The UK has been seen as a relatively stable business environment, while the ructions in Europe have tended to deter investors.
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UK gets to both cut and choose Source: flickr (user: Folkpartiet Liberalerna Goteborg) |
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