Brexit becomes reality

For pro-Europeans in Britain the last six months have been devastating. For a while, after the 23rd June referendum, there was a feeling of disbelief and defiance. Tens of thousands took to the streets. We said Brexit would never happen. We waited in vain for opinion polls to show public regret. But slowly we have been forced to accept that the UK really will leave the EU.

At once, we are being forced to mourn for something we cherish, which we have not yet lost; and to fight for the best possible future for the UK outside the EU, even though we believe it is the wrong course for our country.

Since the start of the year Brexit has started to become reality. This week the UK’s most senior court ruled on the constitutional process for triggering Article 50 of the Lisbon Treaty, leaving the way clear for the divorce procedure to begin in March. A few days before, Theresa May, our new prime minister, set out her aspirations for Brexit in a long speech which provided more detail than expected but fell well short of a specific plan.

Mrs May’s tone was mainly warm towards Britain’s European partners, but she definitively announced that the UK would seek to withdraw from the internal market and the customs union. In their place she called for a new economic partnership, which sounded like some fusion of the EU’s agreements with Canada and Turkey.

If she gets what she wants, such an agreement might prevent the worst of the economic harm Brexit is expected to bring to the UK. But for that to happen a deal will need to ensure that the City of London remains integrated within the European banking system; and that UK-EU supply chains are not just tariff-free but unencumbered by onerous border controls.

In the speech May said that, in the event of it being impossible to negotiate a satisfactory agreement, her fall-back position would be for the UK to trade with the EU under the rules of the World Trade Organisation. This might be mildly disruptive for remaining EU members (for example, it could heighten the risks facing vulnerable banks, as their access to capital reduces). By contrast, it would be catastrophic for British businesses, and it is extraordinary that a centre-right prime minister is seriously considering it.

May also said that, if there is no deal, she would slash taxes and regulation to lure inward investment from the continent. This was an extraordinarily ill-judged threat, considering that the EU will have far more power than the UK in the negotiations to come and Britain will have to rely on its goodwill. And as a threat it lacks credibility, because the policy would destroy the UK’s social model, something May does not have the domestic support to deliver.

Economists are almost universally agreed that membership of the EEA would be much better for the UK than a ‘hard’ Brexit on WTO terms, until any new deal is done. That the prime minister will not even consider this option shows just how far the populist right has captured the British political debate. May’s view is that membership of the internal market breaches the two implied mandates of the ‘leave’ victory – to ‘take back control’ of migration policy and the rule of law.

Even social democrats need to acknowledge, however, that membership of the EEA is not a long-term solution for Britain. It would work fine as an interim measure for 5 or 6 years, while a new economic relationship is being negotiated. But no British government – of right or left – would accept being a member of a market in which it could not share in shaping the rules. In the long-term the UK needs to be further ‘in’ or further ‘out’ than Norway.

Further ‘in’ would mean the UK becoming some sort of ‘associate’ EU member, with influence over legislation.  That might once have been an option, when the UK was a member of the club, as part of a slow evolution towards a two-speed Europe. But after the referendum there is zero chance of it happening. It would be impossible in the context of the UK’s increasingly toxic politics. But more importantly, it would be totally unacceptable for the remaining member states. Pro-Europeans in Britain understand why the rest of Europe must make being outside the EU worse than being inside.

Theresa May has now set out her preferred vision for Brexit. It is now for the EU to respond and it has all the power in these negotiations. The union would be perfectly within its rights to refuse any privileged economic relationship for Britain: ‘the only real alternative to a hard Brexit is no Brexit’ as Donal Tusk has put it.  There would be economic fallout, but the EU would suffer far less than the UK.

However, hard Brexit would be a tragedy for British social democrats and everyone else who wants the UK to be open and integrated with the rest of Europe. For example, if the free movement of workers between Britain and mainland Europe must come to an end, it would be far better to negotiate some form of privileged migration status between the UK and EU, than for the two blocs to treat their citizens on the same basis as people from the rest of the world.

So, when the UK makes requests for continuing partnership and integration, we hope that our friends in the rest of Europe will not push us away. It would set the final seal on this populist calamity, if our European family says we cannot have even a partial partnership, in the wake of this terrible divorce.