#Brexit scenarios… please help!

I wanted to write out some scenarios for the UK’s departure from the EU to put out there and see if there are others.

Some of the legal aspects are noted here, for detail.

1a. Temporary EEA

Likeliest now, I think, is a temporary EEA arrangement which becomes accidentally permanent.

The new PM could suggest EEA (“Norway Model”) as a solution to maintain access to the Single Market and keep the UK together while limiting harm on the City (this may already have happened), and the EU could agree to this quickly as it has the effect of swiftly removing the UK from the EU while limiting economic damage. There is not a lot the EU could do about this because it is a matter of fact that the UK is in the EEA and has expressed no desire to leave it. While it would suit both sides to deem this arrangement “temporary”, it may in fact become permanent.

1b. Permanent EEA

A deliberate negotiating for an EEA arrangement is less likely, as it may tempt other countries (notably non-euro Sweden and Denmark).

2. Swiss Arrangement

The EU would probably quite like the Swiss arrangement, of case-by-case bilaterals. This would cause severe damage to the City, with finance sector jobs moved to Frankfurt, Paris and Dublin.

It would take a very long time to negotiate, however, and would cause significant division and disadvantage within the UK. Some may feel it would becalm those who made immigration the issue more than the “Norway Model” would, but that assumes they can be becalmed at all…

3. Absolute Exit

The rise of populism in both the UK and across the EU may tempt a complete divorce. This would be utterly economically and socially calamitous to both sides, however, and would almost certainly herald the break-up of at least one of them.

4. Remain in EU

You what?

Yet this remains possible. Once the new PM invokes Article 50, the UK is out in two years even if nothing has been agreed in negotiations. Such a calamity may be put back to the people as “Remain an Associate Member of the EU or Leave completely and herald utter chaos”, although even then I wouldn’t want to bet which side would win.

Any more…?

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18 thoughts on “#Brexit scenarios… please help!

  1. korhomme says:

    There are too many unknowns.

    We will have a new PM by early September, but we don’t know yet who that might be. We don’t know what their view of Brexit might be or what proposals they might put forward.

    We don’t know if there will be a General Election, and we don’t know who (if anyone) will win.

    We might guess that Corbyn will go, but we don’t know. If he goes, we don’t know who his successor might be, or what their views might be.

    We don’t even know what Leave actually meant by ‘Leave’ for there were no detailled position papers; even Leave don’t seem to be too sure what they wanted.

    We don’t know what will happen to Scotland or Gibraltar.

    And, in NI, we don’t know how Arlene and Marty will reconcile their opposite positions on the future of NI.

  2. andyboal says:

    I think 4 would be politically unacceptable. It’s my preferred option, of course, but utter political suicide for ignoring the will of the people.

    3 is the true right wing nutter option, which assumes that we can get everything we want from the rest of the world or manufacture ourselves, transport is cheaper than import duties, and people would buy an (eg Asian) alternative rather than pay extra for luxury German cars. It is also the default if Article 50 notice expires without an agreement being reached.

    As an economist I can say that Sammy Wilson’s opinion that we could manufacture stuff ourselves is a great idea, but it is doomed by economies of scale and highly inelastic demand for EU goods.

    2 is a bad idea for the reasons you’ve given, although at least it would maintain our access to the free trade area.

    1a isn’t automatic. I think our EEA membership is heavily bound up in being members of the EU, so we would have to negotiate to stay in it as an independent country.

    What we do have is that the EU wants to keep exporting to us – we are a big market, and the cheaper the prices the more units they sell.

    What we don’t have is the upper hand in negotiations. The nature of our imports from the rest of the EU is that they will still be needed even at a higher price, and the damage caused by option 3 to our manufacturing industry would be terminal, because the size of the two markets means it’s cheaper to manufacture in the EU and export to the UK through import tariffs than vice versa.

    I estimate that EEA membership’s price tag is in the region of €3.5 billion, but that’s just a quick figure based on Norway’s population. It could be less or more for all kinds of reasons.

    The big shock coming for the “Britain is the greatest” part of the unholy alliance that led the Leave campaign, however, isn’t the realisation that we cannot dictate terms to the EU. It’s the realisation that we’re not getting our borders back (maintaining free movement of people and goods), and by the time that exporters comply with EU law and solely domestic businesses find they have to comply with it too (particularly consumer standards) in order to compete with exporters, the three pillars of their campaign will have been destroyed

    What goes around…

    • andyboal says:

      A note on the Swiss model.

      Switzerland tried to restrict free movement of people unilaterally, and found that failure to adhere to their treaties with the EU had consequences in reduced funding and access to programmes. Some would say that the EU was being a bully over it, but I tried asking them what they would do if they had an [implicitly fair] agreement with someone and the other person broke it.

    • There’s actually a debate about what is “default”. The UK is a member of the EEA and some legal experts suggest it would continue to be.

      And I don’t think 4 is out completely. I’ll come back to it Thursday…

  3. Cornelius Logue says:

    Dear Ian, I think your first option is the only sane one given the circumstances. British politics has now become febrile and the DUP’s behaviour in Stormont yesterday was appalling. However for someone whose instinctive identity has always been both British and Irish, with spending my earliest years in a multi cultural street in Tottenham, I fear that the liberal and tolerant strain of Britishness is mortally wounded by this business. Can you imagine what will happen if Johnson’s letter to the Telegraph was ever put into action and a girl in Inishowen needed a work permit to work in a sandwich shop in Derry? A period of reflection is badly needed by those in Northern Ireland who were cock-a-hoop about British sovereignity. Cameron and the vocal outers in the Tory party have a hell of a lot to answer for. Yours sincerely, Con.

    Date: Tue, 28 Jun 2016 06:16:43 +0000 To: corneliuslogue@hotmail.co.uk

  4. “There are too many unknowns”
    But some of those suggested are extremely unlikely.
    One is the suggestion that a new PM could negotiate a deal without the EU much more successfully than last February, hold another referendum and win it. That has happened in Ireland and other EU countries where a treaty referendum failed on the first round.
    It is possible that one of the Conservative party leader candidates will put that as part of their “manifesto”. I can’t see that succeeding even if such a candidate uses the pressure of the SNP threat to back it up.
    The majority of grass roots conservatives are brexiteers and will vote for the ‘clean break’ candidate if that is the choice. Furthermore, that kind of politics would also attract a lot of criticism. It may work in places like Ireland but it would be a dangerous constitutional precedent which would undermine the value of a referendum in the future.
    The EAA solution as I have been given to understand (correct me if I am wrong) carries many strings which, taken together, amount to the UK being obliged to implement EU law and maintaining total freedom of movement for EU migrants. If that is right, it won’t work (politically) as would any model which fails to wrest back some sovereign control over migration.
    As for the possibility of an immediate general election, this is extremely unlikely. A referendum was in the Conservative manifesto. It made no pledge for an election if there was a Brexit result.

    • This is the Rock and the hard place, isn’t it?

      As you say, it has to be a Brexit PM now. Yet that PM will likely pledge to do exactly as Boris suggested – seek an EEA deal without free movement. Only that won’t fly in Brussels (or Berlin).

      Thus it is possible, in such a situation, that the PM could seek a renewed deal in order to stop economic and constitutional catastrophe, and consult the people to remain in the EU (I suspect by election rather than referendum). That carries the serious risk of a UKIP win, though, in which case it’ll be “out out out”.

      What a mess!

    • Not much, tbh!

      The UK is already shaky enough without putting a Customs border in the middle of it.

      The cleanest way to achieve what has been suggested there is simply for Scotland to become a sovereign member state of the EU. What NI does then is anyone’s guess (I’ve already drafted one on that next week!)

      One thing: I think it would be possible for Scotland and NI not to repeal the European Communities Act as it applies to devolved issues (which include Employment in NI). That would mean EU law continued to apply there in the vast majority of cases, meaning they were in effect “of the EU” if not actually “in the EU”. This would potentially be beneficial for inward investors, who would know for sure they would have to meet EU standards in Scotland or NI. Long shot, though!

      • Gareth Griffiths says:

        If E&W stayed in the EEA there would be no need for customs borders.

      • andyboal says:

        No way through on that one – EU law is defined in the Interpretation of the NI Act 1998 as being all obligations etc etc required under the Communities treaties – so if the UK withdraws from the treaties, the effect will be that there are no obligations to comply with.

        I would doubt that we can do a reverse Greenland here, simply because Greenland and Algeria weren’t sovereign nations and were members only by virtue of being part of Denmark and and France respectively as far as I can see – the main country (per se) was a member, so for a dependency such as Greenland to be outside the EU isn’t a big deal. Since Scotland and NI are integrated parts of the UK rather than dependencies such as the Channel Islands and Isle of Man, it would be a completely different ballgame.

      • There are customs borders within the EEA.

      • Gareth Griffiths says:

        Really? That sucks because we don’t want customs borders on either GB or Ireland.

      • There may be work-arounds.

        First, the actual customs points could at least be placed at ports rather than on the actual border.

        Second, there *may* be a way to negotiate EEA+Customs Union, or some such. I haven’t really thought about it.

        Third, we haven’t actually left the EU yet…!

  5. The Algerian option … get nothing, your on your own, be grateful you have enough responsibility to look after your own country without starting petty partisan power trips and just get to work.

    Then go back to the international table once you figure out what you really wanted and what you can offer for it.

  6. […] my scenarios two days ago I noted that there is still a scenario – though very much the least of the four […]

  7. […] my scenarios two days ago I noted that there is still a scenario – though very much the least of the four […]

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