Skip to main content

An illuminated "In or Out" sign is pictured outside a house in Hangleton near Brighton in southern England, on June 23, 2016, as Britain holds a referendum on wether to stay or leave the European Union.GLYN KIRK/AFP / Getty Images

Marmite and CETA have rained on the Brexiters' parade.

Earlier this month Tesco, Britain's top supermarket, yanked Marmite, the foul-tasting but beloved yeast guck that Britons smear on their bread, from its supermarket shelves. It did so because the food-products giant Unilever jacked up the price of Marmite after the pound lost 20 per cent against the dollar, thanks largely to Brexit.

Surprise! That's what happens when you depreciate your currency – inflation rises and anything that is imported – or produced locally with lots of imported ingredients – costs more. So much for the Brexiters' argument that bolting from the European Union would result in a net financial benefit to Britain, or, at worst, come at zero cost.

Then came the Comprehensive Economic and Trade Agreement between Canada and the EU. Seven years went by before the negotiators finally banged out a package they thought would pass muster on both sides of the Atlantic. The regional parliaments in Belgium, notably Wallonia's, punctured that little fantasy.

The Walloons' belief that their farmers would get trampled by Canada's "Big Agriculture" industry and that CETA's investor-dispute mechanism with governments was undemocratic threatened to sink the whole creaking deal this week, before a last-minute fiddle apparently saved the day. Still, the agreement needs approval from the EU's national parliaments, where more teeth-gnashing will take place; full ratification could take another couple of years.

The fraught CETA negotiations may have convinced the deluded Brexiters that leaving the EU and negotiating Britain's re-entry with a new free-trade deal that allows Britain to keep out immigrants it doesn't want will be a nightmare.

If CETA took seven years, how long would a new Britain-EU trade and customs deal take? A decade? 15 years? Remember, CETA was negotiated by willing and friendly partners. Brexit is a divorce, meaning the EU will be in no mood to cut Britain any favours – all the more since an easy ride might encourage copycat departures.

"So the message to the Brexiteers is that trade negotiations with the EU are going to be arduous and fraught with difficulties," Brian Hilliard, chief U.K. economist at Société Générale, said in a Friday note. "Clear though the message is, it has not sunk in. When it finally does, the realization could do great damage to business sentiment."

No wonder British Prime Minister Theresa May, a member of the anti-Brexit camp in the referendum campaign, seems in no hurry to start the official negotiations. Perhaps that is because a coherent exit and re-engagement strategy is rather lacking. She has said formal Brexit talks will start no later than the end of March, but there is some chance it could slip.

Note that there is a serious legal challenge to invoking Article 50, the section of the EU's Lisbon Treaty that puts formal exit negotiations into motion. Some private citizens have gone to Britain's High Court to argue that the article cannot be put into play without a parliamentary vote. If they win, the vote might not happen until after March and that could go in the Remain camp's favour. If so, bye-bye Brexit. Note that a House of Lords committee has already said Parliament should be consulted on Article 50.

Meanwhile, former prime minister Tony Blair told the BBC on Friday that Britain should hold a second referendum to try to reverse the Brexit "catastrophe."

The road to Brexit is starting to look exceedingly tortuous. Now suppose the High Court challenge is lost by the anti-Brexit crowd and Ms. May succeeds in triggering Article 50 in March.

Then what? Britain would, of course, need an interim (or "transitional") trade agreement with the EU to carry it through to the new agreement, which could take many years, as the CETA case proved. Here's betting that any interim agreement would look pretty much like the status quo. Britain would not want to lose access to the EU during the lengthy negotiations, even if it means that Britain would be unable to secure full control over its borders during that period.

For its part, the EU might be happy to grant a status quo interim agreement in the hope that the Brexit campaign, over the years, devolves into a phony war that gets lost in one or two general elections, Conservative and Labour party infighting, a possible parliamentary vote and general Brexit fatigue, or a recession that convinces Britons that it would be foolhardy to hit the road. In a decade, Britain may wonder what that funny referendum was all about way back in June, 2016. Did we crazy Brits really want to leave the world's biggest market?