The authoritative source for independent research on UK-EU relations

27 Mar 2018

UK-EU Relations

It is becoming increasingly clear that there is no good Brexit deal for the UK. All deals, ranging from the hardest ‘No Deal’ scenario to the ‘softest’ deal, where the UK leaves the EU but somehow remains a member of the single market and the customs union, make the UK significantly worse off both economically and institutionally.

The May government proposes that Britain should leave both the customs union (CU) and the single market (SM) but has been notoriously vague, or unrealistic, about what this would mean in practice.

So, in February and March the government responded to the calls for greater clarity in what it wants from Brexit. In a series of underwhelming speeches Boris Johnson, Liam Fox and Philip Hammond made contributions which were all met by a collective yawn, even derision, from the media and informed commentators.

Indeed the former head of his Trade Department likened Fox’s policy of leaving the CU to giving up a three-course dinner for a packet of crisps.

Theresa May’s own contributions in February to the Munich Security Conference, calling for close cooperation on a range of defence and security issues, and in her Mansion House speech on 2 March, did at least manage to secure some temporary support from both pro-European and hard Brexit members of her government and party.

But all of these contributions have exposed how leaving the EU and both the SM and the CU will result in the UK not only becoming poorer than it needs to be but also losing influence and sovereignty.

As the details are studied further it is increasingly clear that in numerous areas the UK – if it still wants to trade with the EU, be one of the world’s major financial centres, follow international medical, health and safety standards, combat terrorism (including state-sponsored murder), catch international criminals etc. – will be obliged in practice to follow rules and procedures decided by the EU while being shut out of EU decision-making bodies at all levels.

These different issues have been set out in some well-informed blogs such as:

  • Richard Corbett’s blog concerning the ‘comprehensive system of mutual recognition’ of standards envisaged by Mrs May;
  • Gijs de Vries’ blog, concerning terrorism, judicial affairs and crime-fighting;
  • Lord Hannay’s blog on state aid and competition rules.

Not to mention many others, including the government’s own impact analyses, which have shown that in all Brexit scenarios the economy and the public finances will be adversely affected. Any offsetting benefits from free trade agreements with the USA, or other countries being talked about, will be minor.

And overshadowing all of these problems is the simple realization that this government’s stance on Brexit will require a hard border either within the island of Ireland or in the North Sea.

So alternative soft Brexit options are being promoted by pro-Europeans who want to minimize the negative impact of the decision to leave. They involve keeping the UK in either the SM or the CU or both. Do they offer a better solution?

Certainly businesses and private individuals would have much greater clarity over rules and procedures and trade between the UK and the EU would flow more smoothly. Certainly the UK might have some marginal influence in various EU institutions and agencies.

But in leaving the EU while remaining in the SM and in the CU the UK would still become a rule-taker, accepting all the rules of the single market including the four freedoms and the role of the European Court of Justice, without any representation in the decision-making bodies of the Union.

That may be tolerable for Norway, which has negotiated deals with the EU to protect its two key sectors (agriculture and fisheries), but it would not be acceptable for the UK with its large and complex economy. No UK government would accept such a situation for long.

In short a ‘soft’ Brexit would not be sustainable.

And even continued membership of the SM and CU would not eliminate all border controls with the island of Ireland. At the very least, with Britain out of the Common Agricultural Policy, there would need to be checks on the vast two-way flows of agricultural products that take place across the border.

Thus both the course being charted by Mrs May, and the softer Brexit options being pursued by the pro-Europeans and the Labour Party offer a Brexit outcome that leaves the UK significantly worse off economically and with a significant loss of control over policy.

So why bother leaving the EU at all? The supposed ‘will of the people’ is said to be paramount. But, as Sir John Major, one of the few statesmanlike politicians, has pointed out, December 2020, the end of the mooted ‘transition period’, is nearly five years after the referendum.

The electorate will certainly have changed and very likely will have formed a more mature, informed opinion.

At another level, it is a great pity that the whole Brexit debate is still being carried on as a sort of cost-benefit analysis, failing to comprehend the deeper and more fundamental purpose of the EU.

It may be flawed, but it remains a largely successful attempt of peoples to cooperate and work together in the face of common challenges as well as in the interest of greater prosperity. Indeed, that it is proving so difficult to leave is a measure of how great and far-reaching this common purpose has been.

Why throw it away for something that increasingly is revealed as a chimera, at a time when those common challenges seem greater than ever?

Short of withdrawing the Article 50 notification before the end of March 2019, the most sensible short term solution to this dilemma would be to extend the Article 50 negotiating period instead of having some “transition” arrangement.

We have argued this point previously. ‘Transition’ is a one-way street out of the EU, before the details of the proposed future relationship between the EU would be known. It offers no possibility of turning back.

Happily, an increasing number of MPs and peers, including ministers, and the cross-party Commons Brexit Select Committee, are now also advocating this course of action, so that Parliament would have the chance of a genuinely meaningful vote on the terms of Brexit rather than just on broad principles.

It is also in the interests of the EU27, who on the whole would much prefer Britain to remain in the EU.

By John Speed and Stephen McCarthy, former officials of respectively the European Court of Auditors and the European Investment Bank.


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