One of the alarming aspects of the British Brexit debate is the way that it keeps going around in circles.

Over the summer, the cabinet appeared to have taken a step toward a more realistic Brexit policy when it agreed to request a transition period of around two years after the U .K. leaves the EU in March 2019. At the time, this looked like a victory for the Treasury, which had been warning that it was impossible to negotiate a new deep and comprehensive free-trade agreement with the EU in what remained of the two-year...