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21 June 2018

The Brexiteers are discovering that the UK already had the best model: EU membership

Even some Tory Leavers now concede that Britain will end up in an inferior position. 

By George Eaton

The greatest obstacle to a hard Brexit is not parliament but geography. Theresa May has pledged to leave both the customs union and to avoid a hard Irish border; two aims that have proved impossible to reconcile.

In view of this, the UK has proposed temporarily remaining in a customs union with the EU (“the backstop”) until a workable solution can be found. But this alone would not prevent a hard Irish border. To avoid any controls, the UK would also have to remain in the single market for goods (as I noted in my cover story last week). This option, the well-connected Charles Grant suggests in the FT, will soon be proposed by Theresa May at her cabinet’s Chequers meeting on 3 July.

But problems immediately present themselves. The EU has consistently stated its opposition to “cherry-picking”. Just as one cannot be half-pregnant, so can one not be partly in the single market. It was Xavier Bettel, the prime minister of Luxembourg, who perhaps put it best in 2016: “Before, they were in and they had many opt-outs; now they want to be out with many opt-ins.” Even if Brussels accepts the latter, it would extract a heavy price. 

The UK could, of course, retain full membership of the single market (the “Norway option”). But as the EU has made clear, this would mean accepting the four freedoms the free movement of goods, capital, services and labour and continued budget contributions.

For May, who has consistently vowed to restrict EU immigration and to reduce membership payments, this would be a humiliating failure. For Tory Leavers, it would be an intolerable capitulation (inferior, some privately concede, to EU membership). The EU and others would be left with little incentive to strike a new trade deal with the UK on services alone (where Britain has a comparative advantage).

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Yet the Brexiteers are merely discovering what was clear all along: there is no cost-free option for the UK. Britain can be Norway (high access, low sovereignty) or it can be Canada (low access, high sovereignty). What it cannot achieve is some superior hybrid of both.

The UK, in European eyes, was already having its cake and eating it. As well as membership of the single market and the customs union, Britain enjoyed a formal opt-out from the euro (the only member state other than Denmark to do so) and the borderless Schengen Zone, a £5bn budget rebate and numerous home affairs opt-outs.

The great irony of Brexit, then, is that it is teaching the UK that it already had the best model: EU membership.