UK tied up with EU like never before

The Brexit talks have London devoting more and more time to Europe, writes Andrew Hammond

British prime minister Theresa May has set out a vision for the future UK-EU relationship in a bid to kickstart formal talks on a transition period for when the UK is scheduled to leave the EU in 2019.

After intensive discussions last year on divorce issues, and then negotiations later this year on a final framework deal for its EU exit, Ms May’s speech made clear that she is increasingly realising one of the great ironies of the 2016 referendum decision to leave the EU.

That is, the monumental effort and time London now needs to devote to the Brussels-based club for the foreseeable future, as it seeks to negotiate the terms of its departure, is more so than perhaps all previous post-war UK administrations did before the Brexit vote.

Thus the 2016 referendum that saw around 52% of the population apparently voting for cutting ties with the EU is now seeing Ms May and her team devote huge attention to Europe, with a key strategic priority to develop a new relationship with the 27 other members.

Indeed, such is the scale of the task under way that it is likely the most complex and important peacetime negotiations that the UK has ever faced.

Around 18 months into Ms May’s time as prime minister, even after her big speech on Friday, and her address on post-Brexit security issues in Munich last month, there remain multiple key questions about the UK’s likely pathway towards the EU exit door.

For instance, while Ms May continues to rule out a customs union with the EU-27, her speech underlines that she still has no clear or coherent answer to how this can be done without a harder border in Ireland.

Other members of the cabinet — including chancellor of the exchequer Philip Hammond — have refused to rule out continued membership, post-Brexit, of the customs union.

Chancellor of the exchequer Philip Hammond

To be fair to Ms May, the scale of the challenge she faces isn’t all of her own making given that she inherited, as prime minister, no formal EU exit planning because her predecessor, David Cameron, refused to contemplate losing the referendum.

However, her government’s grasp of the realities of Brexit has been shaky from the start. As Ms May appears now to be fast discovering, the complexity of the talks she is leading with no House of Commons majority means the government will find it hard to negotiate an alternative model to current EU full membership that can secure consent from Brussels and the EU member states, which even comes close to providing the same balance of influence and advantages that the UK gets from its current full member status.

For all the EU’s flaws, and it has many that need to be better tackled, the UK has enjoyed a uniquely positive position in what is the world’s largest political and economic union. For instance, it has all the benefits of the single market, but is not part of the eurozone, and it has retained a big budgetary rebate.

The stark reality is that, while the nature of existing agreements with the EU vary from Norway to Switzerland and Canada and Turkey, all have key disadvantages, including the fact that none of them provide full access to services which accounts for around 80% of the UK economy.

Moreover, Brexiteers continue to generally shy away from the implications of what even access to (let alone membership of) the single market may entail without EU membership.

Preferential access to 53 markets outside Europe with which the EU has free trade agreements will come to an end with Brexit, or else will need to be eventually renegotiated bilaterally in coming years.

And outside of the economic realm, Ms May knows, as a former home secretary, that forthcoming discussions offer no guarantees that the US could fully replicate existing co-operation in areas like policing and security which she has previously cited as key.

Taken overall, the realisation is spreading within the UK government that more of its resources and attention needs to be directed towards the EU than its post-war predecessors.

This irony is compounded by the fact that, despite all of this effort, Ms May will struggle to strike a deal that is better for the UK national interest than one which continued membership of a reformed EU potentially offers.

Andrew Hammond is an associate at LSE Ideas at the London School of Economics and an adviser to business management consultants Reputation Inc.

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