03 May 2016

“Britain’s Future in Europe: The known Plan A to remain, or the unknown Plan B to leave”

The Centre for European Policy Studies (CEPS) team - led by Michael Emerson - has produced a timely update[1] to their analysis of the UK Government’s `Balance of Competences Review’. Its 3000 pages did not reveal any significant need to adjust Britain’s policy relationship with the EU, so the Prime Minister’s February agreement only had to “marginally improve” the status quo as we are only `in‘ what we like and `out’ of what we don’t like. So UK electors now know and understand `remain’ means.

Emerson has  now felt compelled to turn the team’s forensic analysis to the practical implications of the `Leavers’ Plan B “Since the posing of a choice between a ‘known’ and an ‘unknown’ is a big hazard in democratic deliberations, this study does some homework that the secessionists have been unable or not wanted to do.” It quickly becomes clear why the secessionists did not do their homework – despite the years available for preparation.

CEPS repaired the omission in 32 very readable pages. UK-based observers often try to infer what “Brussels” may be thinking but the CEPS researchers – as a formidable group of former `insiders’ – already know, or can simply ask their appropriate friends. This deep knowledge of intricate detail shows through with remarkable persuasive power.

“The overall conclusion is that all three Plan Bs fail to come up with something preferable to Plan A, as a matter of cold calculation of concrete costs and benefits. It would also inflict huge damage on the entire European project…” Accordingly, CEPS expects the EU to play a tough negotiating game with a long period of uncertainty – risks the rest of the EU gaining market share from the UK of both its two ‘crown jewels’ – the City and Foreign Direct Investment (FDI).

The Leavers economic policy prescriptions are evolving very rapidly as inconvenient events pile up. Critically, their visceral attacks on levels of immigration seem to have forced them to abandon any idea of retaining formal access to the Single Market – so Swiss and EEA models are now off the agenda as free movement of people would be a pre-requisite. An uncomfortable but logical consequence looms: any EU member who feels their citizens are being discriminated against may well veto any extension of the two-year limit on negotiations and the eventual trade deal.

This just leaves CEPS’ “Plan B.3” “trying to negotiate the best possible deals with the EU and its international trading partners.”  This is the messiest of all.

“The idea of the UK replacing the EU’s international free trade deals with something better and faster is an illusion, since major trading powers will continue to view the EU as their priority” rather than prejudice their prospects with the market that is five times that of the UK. Leavers argue the EU would be keen to conclude a friendly free-trade deal. “This is an illusory and misleading simplification, which grossly fails to understand the likely EU response.” The upshot is a real risk that the UK would only have the most basic WTO arrangements that would exclude services and leave us outside any customs union - thus subject to expensive and time-consuming “rules of origin” requirements and border inspections.

On immigration, CEPS believes the EU would surely reciprocate on visa requirements for EU citizens in the UK by requiring work permits for UK citizens in the EU - with long, uncertain and bureaucratic procedures. For British `ex-pats’, there are currently legally secure mechanisms for cooperation between national health services, which eliminate risks of non-coverage, or discriminatory lack of access to free health care. CEPS is clear that “Secession would also mean that the EU’s current social security arrangements for non-active migrants would cease for UK citizens on the continent.”

This piercing analysis shows with remarkable clarity some of the profound issues that the Leavers have not addressed – at least in public. They owe it to the British people to answer CEPS’ detailed critique.

Graham Bishop is a Professorial Research Fellow at the Global Policy Institute. www.GrahamBishop.com

Full version available for consultancy clients here

© Graham Bishop