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11 January 2018

The EU is not “punishing“ the UK for Brexit

By vowing to leave the single market, Britain has chosen to punish itself. 

By George Eaton

Philip Hammond is usually denounced by Brexiteers as the cabinet’s “remoaner” in chief. But during his trip to Berlin, the Chancellor embraced one of Leave’s central narratives: that the EU is seeking to “punish” the UK

According to this argument, Britain is being made to suffer in order to deter other member states from leaving. The EU is certainly mindful of this risk. Should Britain’s position appear unchanged (or even improved), eurosceptic movements in other countries would be dramatically empowered. 

But the notion that Britain is therefore being “punished” does not bear scrutiny. The EU has long made it clear that the UK cannot expect to retain the benefits of EU membership without the costs. Indeed, the UK pre-emptively acknowledged this by ruling out membership of the single market in order to restrict free movement (and membership of the customs union in order to sign independent trade deals). There will be an economic price to pay for this choice (indeed, far from gaining £350m a week,. the UK is forecast to lose nearly £300m a week). But it is one most Conservatives are prepared to accept. 

The “Norway option”, the EU has long emphasised, is still available to the UK. But if Britain insists on leaving the single market, it will have to settle for something closer to the limited free trade deal struck with Canada. The EU is not punishing Britain: it is merely upholding its rules. If you’re not a member of the club, you can’t expect access to the best facilities. 

There is, however, a third way. Germany will reportedly demand that the UK pay in return for a financial services deal (which would not be covered by a basic trade agreement). Despite Theresa May’s hardline rhetoric, the Conservatives’ 2017 manifesto did not rule out this possibility (and nor did Hammond in Germany). 

To view the Brexit negotiation through the prism of “punishment” is to misunderstand it. Far from the EU inflicting harm on Britain, Britain is voluntarily harming itself. But lest they undercut their political masterplan, the Brexiteers dare not acknowledge this economic reality.