Tuesday 03 January 2017 4:45 am

Prepare to refight referendum battles: How Brexit will dominate 2017 politics

Brexit will completely dominate 2017. The big short-term question is whether the government’s initial negotiating position will be enough to keep Leave campaigners onside, or whether they will feel a pro-EU Prime Minister and chancellor have betrayed them.

This depends on the nature of the proposed deal on free movement. Anything other than a major restriction on immigration – with significant exceptions for high-skilled migrants – will lead to a serious backlash. Theresa May and Brexit secretary David Davis get this, and will surely win out.

But a major row is still on the cards over access to other key pillars of the Single Market. It looks like the government will try to keep things as close as possible to the status quo. Given this would include some sort of significant concession from Britain’s side – some have floated the idea of paying for Single Market access – Ukip and Vote Leave veterans will likely campaign hard against it.

Who will win such a battle? This depends on money. Vote Leave repeatedly smashed Remainers over the head by objecting to Britain’s payments to the EU, arguing they should be redirected to the NHS. We might therefore see a bizarre rerun of a key part of the referendum campaign – with some arguing that any payment is not worth it, and others arguing jobs will be lost without such a deal.

At the mid-point of 2017, when our initial negotiating position is clear, attention is likely to turn to whether any deal is possible at all. Sir Ivan Rogers – our ambassador to the EU – recently generated controversy by reportedly suggesting a deal with the EU would be hard to achieve and might drag on for a decade. Maybe he was excessively pessimistic but he was guilty of nothing more. As we recently saw with Canada’s negotiations with the EU, it only takes one country to oppose a deal and everything is off. That does not mean Brexit was a mistake, but that the road to exit will be rocky.

We are bound to hear senior European politicians and officials cast doubt on a deal. That could be followed by various businesses shifting some of their EU-focused work to Paris, Frankfurt and Amsterdam. The BBC and the Financial Times will not only splash these stories but start to drive a narrative that Britain is adrift. It would be surprising if there was not a mini flurry of such stories by the summer. There will be at least one protracted period of deep concern.

To the extent it matters, with Brexit’s dominance, what does 2017 have in store for the other parties? Corbyn is only a few high-profile missteps away from more serious problems. Another formal challenge to his leadership is unlikely, but various Blairites, the most professional politicians within Labour, must be thinking of a breakaway group – even if that is simply an unofficial but named faction within the party itself. We might hear of such plans at some point.

The Lib Dems are betting the farm on a pro-EU position, hoping to suck up as much of the support of the 48 per cent as possible. It gives the irritated Southern middle class somewhere to go, but it will cause them problems in the North of England where they were once competitive. More interesting is whether Ukip manages to execute a left-wing shift under Paul Nuttall to become a truly populist Northern party – one that threatens Labour and wipes the Lib Dems out. Ukip’s endemic incompetence makes a clean shift unlikely but, in a classically messy Ukip way, they might find themselves most of the way there.

Perhaps someone or some party will surge in 2017. From the vantage point of early January, however, it looks more a question of who will still be standing by next December.