EU Referendum


Brexit: Monograph 15


16/11/2016




The last month or so, following the Conservative Party conference and Mrs May's speeches, has been a period of intense frustration.

A media, obsessed with the "hard Brexit" narrative and then with its "Trump mania", has distorted the debate, dragging it away from the substantive issues, and losing focus on the things that matter, effectively concealing a the lack of progress in Government as the self-imposed Article 50 deadline draws nearer.

For better or worse, The Times story yesterday has refocused attention on Government and while attempts have been made to reduce its impact, we are seeing a continuing discourse over its relevance.

Whether or not the claims in the memorandum used by The Times - written by a consultant, thought to be from the firm Deloitte, whose analysis was part of a pitch for work – have been exaggerated is, at this particular moment, impossible to tell.

But it indisputable that, whether or not the Government has a Brexit plan, it has not publicly revealed it. On the other hand, the signals coming from various quarters in Government are opaque and at times contradictory, and the departmental ministers charged with dealing with Brexit are not building a coherent picture, or telling us anything that might inspire confidence that they are on top of the game.

The crucial thing about Brexit is that it can't be fudged. When our representatives finally go to Brussels and make their case for an exit settlement, they will be working within impossibly tight constraints on, as yet, the most complex political scenario of the Century – and they have to get it right.

It is, therefore, not unreasonable for those of us who have devoted so much time and effort to the cause of leaving the EU to expect more than we are given.

Nor is it unreasonable of us to point out that, for all the self-congratulatory narratives that are hitting the bookstores, the main "leave" campaigns, and especially the official Vote Leave campaign, have made a monumental mess of things by failing to offer a coherent exit plan prior to the referendum, which would have constituted a mandate, on which we could pressure Government.

The front page of the latest edition of Private Eye - used with the express permission of Ian Hislop - sums up the situation beautifully. A campaign built on the most shallow and crass of lies is unravelling after the event, putting us in the situation where, having won the war (despite, not because of the noise-makers) we are in danger of "losing the peace".

With that in mind, though, I have published yet another Monograph. This is Monograph 15, the first of two parts, on leaving the Single Market.

This is a subject on which an extraordinary amount of nonsense is being talked, alongside a continued failure to understand that, in seeking a sensible withdrawal package in the time allotted, we are going to have to trim our expectations, and work towards an interim solution.

Were it the case that we were not in the EU's Single Market, there would be no question of us seeking to join it, as part of our exit settlement. But we are part of it, so we have to deal with the world as it is, not as we would like it to be.

Whether or not the Single Market is a "good thing", it is unarguable – except to the crazies – that precipitate, unplanned exit would cause a great deal of economic (and probably political) damage. Therefore, the issue of the moment is not whether we should leave, but how - and the answer to that is "slowly and very carefully".

But, as my new Monograph points out, asking whether we should leave the Single Market is the wrong question. This has been an extremely difficult pamphlet for me to write, because it took me a great deal of time for that conclusion to dawn on me.

The point about the Single Market is that, in the final analysis, it is a system of market regulation. Out of the EU, the UK still needs a system so, when we leave, it will have devise one of its own, unless of course, we continue to participate in the EEA.

What we actually lose from withdrawing from the Single Market, would not be the regulation, per se. Rather, we would cease to coordinate our measures with other countries in the EEA, the result of which would be to lose access to their markets.

With our withdrawal would come the freedom to devise internal regulation more in keeping with domestic needs, but the price would be the closing down of trade with former EEA partners. That could prove unacceptable – and most likely would be rejected as an option.

That leaves the UK in a position where it will have to look for a different set of arrangements – with the same or different partners - trade barriers. But the greater the divergence from the status quo, the greater will be the loss of access.

Viewed from that perspective, even if the UK fully withdrew from the Single Market, it would not so much be leaving as switching from one system to another.

Come what may, the UK market will not be unregulated when we leave the EU. These fantasies of a bonfire of regulation are just that – fantasies. The best we could hope for is that the market would be differently regulated with a different balance of advantages.

Logically, therefore, there is no specific issue for the UK in deciding to withdraw from the Single Market, and no great gain in so doing. The real concern has been the use by the EU of the Single Market to further its political agenda.

If that agenda was fully and reliably separated – which it would be when we formally leave the EU - there could be less reason for rejecting the concept of a single market. The issue might then be best couched in terms of how that single market was managed, and by which body. Whether to leave the Single Market, therefore, is perhaps the wrong question.

It might be a better idea to ask how the Single Market could be changed to make it unnecessary for the UK to leave, and politically possible for it to maintain an active trading partnership with EU Member States. That is the conclusion I draw in this new Monograph and I will explore how we go about doing this in Part 2, attempting to repair the wreckage left behind by Vote Leave.