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Commentary | 18 October 2016

Neither ‘hard’ nor ‘soft’: how a smart Brexit should look

Brexit EU United Kingdom Euro-Atlantic Security

Brexit was an accident waiting to happen. For 40 years we have been a semi-detached member of the EU. When the Treaty of Rome was signed by the original six we declined to join certain that our destiny, as an island nation, was elsewhere.

When, under Harold Macmillan, we changed our mind, we were vetoed by General de Gaulle who, with considerable prescience, considered that we were not European enough. From the moment we did join we were half-hearted. Margaret Thatcher fought, with great success, to “get our money back”. John Major negotiated opt-outs on the Euro and the Social Chapter. Tony Blair made no effort to join Schengen. Gordon Brown ensured that we kept out of the Single Currency and David Cameron signed the death warrant with the referendum.

The referendum, itself, was not a battle between Eurosceptics and Europhiles. Most who voted to remain, including me, were sceptics with no interest in the UK joining the single currency or opening our borders by becoming part of Schengen. While deeply disappointed with the decision to leave, our view was that we got the best of both worlds by being in the EU while rejecting the bits we didn’t like.

This background is highly relevant to where we go from here. There is a facile assumption that it is logical for those who voted to Leave to now want a “hard Brexit” while remainers are anxious for a “soft Brexit”.

I consider this to be a rather foolish misunderstanding of the issues that have to be resolved. It is surely reasonable to assume that all in Britain, on both sides of the divide, would like British companies and businesses to face the lowest possible tariffs and other barriers in the trade they seek to do, over the years to come, with the half billion consumers who live in the European Union.

The task for our negotiators will be to help our exporters, in both goods and services, as much as possible as long as any agreements and compromises made do not violate the decision that the electorate reached on 23rd June.

While there can be no certainty as to what the majority of the electorate who voted to leave expected, the following would, surely, be acceptable to the vast majority. Firstly, we will leave the European Union. Secondly, the European Court of Justice will be unable to determine the laws under which we live. Only our own Parliament will be able to do that. Thirdly, Parliament, not Brussels, must have the last word as to how much access citizens of the European Union will have, in future, to live and work in the United Kingdom.

What does this mean for the access we will have in future to the single market? It is best to bear in mind that we use the term single market to describe four separate freedoms: free trade, free movement of capital, free movement of people, and free trade in services.

Disaggregating these four freedoms helps us predict what is likely to happen. A free trade in goods agreement may involve hard bargaining but will be achieved without much difficulty. The EU has such agreements with many countries elsewhere in the world. Free movement of capital is not a problem for the UK. We do not have, and do not want, any exchange controls.

Restricting free movement of peoples will be difficult and will limit our full access to the single market. But this is not a zero-sum issue. The government has already made clear that it has no problem with current residents from elsewhere in the EU and that it will continue to welcome those with special skills such as in financial services, or where the needs of the NHS and other public services will benefit.

It is worth mentioning that Angela Merkel has said that “full” access to the single market will not be possible without “full” freedom of labour. There is a huge range of options between zero and 100% as the negotiations will show.

As regards the City of London and financial services, 5,500 UK companies use “passporting“ to gain access to sell their financial products elsewhere in the EU. But over 8,000 companies from elsewhere in the EU themselves use passporting to have access to the City of London and our financial markets. This will ensure that there is serious negotiation as both sides will have much to preserve and much to lose.

Finally, we need to ensure that on the wider question of foreign policy and security the UK and the rest of Europe continue to work together. France and Germany know that without the UK we would not have been able to enforce financial and banking sanctions against Russia; nor achieve the deal with Iran to cease their nuclear weapons programme.

What we will need, in future, is a EU+1 forum whenever the countries of Europe are seeking to promote a common foreign policy to ensure that global policy is not the monopoly of the US, China and Russia with Europe excluded.

The United Kingdom has always believed that any threat to the security of continental Europe is also a threat to us. That is why we led the wars against Napoleon in the 19th century. It is why we declared war immediately after the Kaiser invaded Belgium in 1914 and Hitler invaded Poland in 1939.

The European Union did not exist in those years but the geopolitical reality required the UK to stand four square with those fighting to preserve freedom and repel aggression. That remains as true as ever as we contemplate the years to come. On such issues Europe must seek to continue to speak with one voice.



The opinions articulated above represent the views of the author(s), and do not necessarily reflect the position of the European Leadership Network or any of its members. The ELN’s aim is to encourage debates that will help develop Europe’s capacity to address the pressing foreign, defence, and security challenges of our time.