Britain will have to decide between a Near-In and Far Out model of EU relations

Britain will have to decide between a Near-In and Far Out model of EU relations

The U.K. decided that the common solution agreed in February to deal with its migration problem was inadequate and that this justified a decision to quit the EU. So be it.

But it is hard to see why EU member states would agree to unravel rules on free movement that they considered so sacrosanct when the U.K. was threatening to leave now that the U.K. has actually decided to leave—particularly if doing so hands the U.K. a competitive advantage.

As a result, the U.K. now faces a simple choice between a “Near-In” model of Brexit, which aims to retain as far as possible the current benefits of membership or a “Far Out” model, in which the U.K. largely reverts to trading with the EU on World Trade Organization terms, at least until a new trade deal can be negotiated.

The former means accepting free movement of people, payments into the EU budget and the continued jurisdiction of the ECJ, thereby breaking promises to Brexit voters, not least those who were motivated by the Leave campaign’s aggressive focus on immigration. Or it means disappointing business, which overwhelmingly wants to retain full membership of the single market including, crucially, for the U.K. financial services industry.

Yet this choice may not be so complicated. No matter how Mr. Johnson and his supporters may now wish to disown their campaign’s emphasis on immigration, a political consensus seems to be hardening around the need for tougher post-Brexit immigration controls, virtually ensuring the U.K. is heading for the Far Out option.

As this realization sinks in with businesses, the economic pain that began to be felt as soon as the referendum became clear is likely to become worse: Investments will be delayed and canceled, some jobs will be lost while others shift onshore to the EU and growth will stall.

Difficult constitutional issues will take center stage, such as Scotland’s future in the U.K. and the Northern Irish border, leading to further damaging uncertainty.

The economic pain may emerge gradually to change minds in large numbers. Nor is there any guarantee that economic insecurity will trigger a swing back in favor of Remain as opposed to a further slide toward greater nationalism, racism and xenophobia and even greater hostility to elites and “experts”.


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