Matthew Lynn

It is petty, small-minded, mean-spirited, and childish. It is certainly not difficult to think of a few adjectives to describe the UK’s decision to refuse diplomatic status to the European Union’s mission in London. Diplomats, and European ones in particular, take matters of status, protocol and etiquette very seriously, and the snub looks, on the surface at least, designed to diminish our closest neighbour. The ambassador for, say, Mozambique, or Honduras, has full diplomatic recognition, but not the person representing the 440 million strong trading bloc on the other side of the English channel. Wars have been started over lesser slights.  But hold on. Sure, you can argue that the UK is being silly. But so is the EU.

Rewind a few months, and it was all meant to be very different. With Covid-19 rampant across the world, the European Union would take charge of sourcing vaccines from the major drugs companies. Its massive buying and regulatory power, coupled with its finely-tuned administrative machine, would make sure its 440 million people were protected from the virus before anyone else. It would be a magnificent demonstration of the whole point of the organisation. The trouble is, not only has the project already started to come off the rails, it is getting worse with every day that passes. Europe’s vaccine alliance is crumbling with potentially far-reaching consequences. Europe’s vaccine alliance is crumbling with potentially far-reaching consequences.

It was a ‘rush of blood to the head’. Its central bank would prove to be hopelessly ineffective. And cultural differences would remain too deeply ingrained for an internal market to ever work as it should. We learned this week from papers released in Dublin that Mrs Thatcher was completely damning about the idea of a single currency for the European Union. Looked at with the benefit of 30 years of hindsight, however, it is clear that the most remarkable point about her views is not just how intransigent she was but that she was completely right. The Euro has been a comprehensive failure, just as she said it would be. Rewind three decades to the fading months of the Thatcher premiership and she was facing what turned out to be terminal trouble over her views on Europe.

In the end, the fish were only of symbolic importance. Neither does it matter that much what happens to Scottish seed potatoes, no matter how much of a fuss Nicola Sturgeon kicks up. Farming, tariffs and quotas are of relatively little importance given that the exchange rate will simply adjust to compensate for any changes that are made. As the UK and the EU finally agree a trade deal, there was one victory that really mattered: regulatory divergence. And on that the UK appears to have secured a victory.

The port of Dover has been closed down. The Eurotunnel isn’t carrying any freight for a couple of days. The lorries are already starting to back up in Kent, the supermarkets are working out where they can get fresh supplies from, and flights have been suspended, with the British likely to find they are turned away from most of our neighbouring countries. If you had blanked out all the other news you might think that after some terminal row about herring, Brexit had actually been brought forward by ten days, creating the kind of chaos that even the most swivel-eyed Remainer could scarcely have imagined possible. And yet, of course, it is the new strain of Covid-19 that means restrictions are being put in place. But, hey, one thing seems to have come good.

Factories will close. Prices will rise. Profits will suffer. Another day, another warning of disaster from one of the major car manufacturers about the catastrophic cost of a no-deal Brexit. But hold on. Before anyone’s eyes start to glaze over, there is a twist to this one. It is a German company that is starting to worry about the hit to its bottom line. And, in truth, it is hardly likely to be the last. Yesterday, BMW, which used to be the most formidable manufacturer of upmarket automobiles until Tesla came along, went public for the first time about the financial impact of Britain leaving the EU without a deal.

Currency speculators at some of the hedge funds in Mayfair may be feeling quietly pleased. Trade experts will be relieved that their lucrative consultancy gigs will keep on coming. Heck, even financial columnists can safely pontificate about the possible outcome for a while yet, while the FBPE mob on Twitter can carry on predicting the apocalypse every time Nissan adjusts its production schedules. There are a few people for whom today’s agreement between Boris Johnson and European Commission President Ursula von der Leyen to carry on discussing a trade deal will come as a relief. For the wider economy, however, it is little short of a disaster. It is hard to know exactly what there is still to discuss between Britain and the EU.

Lorries will be backed up across Kent. The shops will run short of essential goods. Travel plans will be disrupted, and factories will start to close as British goods are shut out of their main export markets. As the UK comes to the end of its transitional deal with the EU, and as talks on a trade agreement appear to have reached an impasse, there will be plenty of high-stakes brinkmanship, and pressure on the government to give some ground on fishing and regulation to avoid the potential chaos of no deal. And yet in truth, if Boris Johnson caves into the EU’s demands at the last moment, the voters will punish him — and they will be right to do so. Right now, it is anyone’s guess whether a trade deal can be done at the last moment between the EU and the UK.

They’ve only received a fraction of their old salaries. Many have missed out on months of work. And their pension contributions and holidays have been completely scrapped. So it is perhaps understandable that teachers, town planners and tax officials are feeling a little aggrieved. Except, er, no, sorry I made a mistake there. That was a description of what happened to the self-employed over the last eight months, not the average public sector worker. Instead, it now looks likely that the government will impose a pay freeze on everyone who works for the government this year, and possibly next as well. The 5.5 million affected will reportedly include the police, armed forces, teachers and civil servants.

A new era of transatlantic cooperation will have begun. The United States will pivot towards Brussels. The trade wars will come to a swift end, and the American president will once again be a respected figure on this side of the Atlantic.  With Donald Trump finally defeated, if not quite yet evicted from the White House, most commentators are expecting a far closer relationship between Berlin, Paris, Brussels and Washington, with Boris’s Brexit Britain left out in the cold. But hold on. Something is not quite right with that narrative. Instead, the EU seems intent on going to war with Joe Biden. In the very same week that the veteran politician finally made it to the presidency, the European Union has, oddly, made two extraordinarily aggressive moves against the US.

There are still safety trials to be completed. Data has to be collected, checked, double-checked, and then peer-reviewed. And we still need to find out whether it is the most effective of the various candidates currently in development or whether there is something even better just around the corner. But the Pfizer vaccine has already proved something beyond any reasonable doubt. Free enterprise works. And for all its flaws, it remains the best system for solving complex problems. Amid all the justifiable excitement over the potential approval of the first safe and effective vaccine against Covid-19 it would be easy to overlook one point: the vaccine was developed with private money.