Tuesday, 13 June 2017

'Hard' Brexit? 'Soft' Brexit? No Brexit?

In June 2016 the UK went to the polls in the 'Brexit' referendum that asked a simple question:
"Should the United Kingdom remain a member of the European Union or leave the European Union?"

However it isn't that simple.


In 1973 the UK joined what was then called the European Community (EC) for purposes of being a member of the 'Common Market'.

In the UK, for a long time goods and services have been able to move from Lands End to John O'Groats without having to stop at border posts between counties, and without duties and tariffs being applied along the way.  The idea of the 'Common Market' was for that to be the case across the borders of member countries.  Economic activity would increase, and greater prosperity ensue.

Over the years the EC became the European Union (EU). Just like people can move freely from Scotland to live or work in the South East (and vice versa), the principle of 'free movement' across the EU was put in place.


Just as the EU has evolved, the 'Common Market' has morphed into three concepts:
  1. The 'Single Market' in which not only EU members but also other countries participate, notably Norway, Iceland and Lichtenstein
  2. The 'Customs Union' which involves all the 'Single Market' countries plus a few others such as Turkey
  3. The 'European Free Trade Area' (EFTA) which involves not only the Single Market countries, but also Switzerland

In simple terms:
  1. The 'Single Market' eliminates tariffs, quotas or taxes on trade, and includes the free movement of goods, services, capital and people
  2. The 'Customs Union' means each country applies the same tariffs to goods from outside the union, and may not negotiate its own trade deals 
  3. A country that is in the EU is bound by the rules of both the Single Market and the Customs Union 
  4. A 'Free Trade Agreement' could be struck between the EU and UK, such that no tariffs or taxes or quotas on goods and/or services would apply when goods and/or services moving from one country to another.  This would allow the UK to negotiate its own trade deals with other countries
 Further details can be found in this BBC article.


There is one issue which the EU has identified as one of the top three to be resolved before any new trade deal is put in place.  The land border between Northern Ireleand and the Republic of Ireland.

This would remain open if the UK remained in Single Market or Customs Union.  But a Free Trade Agreement would almost certainly mean border controls between the UK and the EU countries, including between Northern Ireland and the Republic.


Given the various options, plus the possibility of a new style of relationship between the UK and EU, it is better to think of 'harder' and 'softer'

A proper 'hard' Brexit would mean leaving the Single Market and Customs Union.  A softer Brexit would involve remaining in one or both, or some other arrangement that retained elements of them.

The problem is that a form of Brexit that meets the desire to stop free movement and lose the jurisdiction of the European Court of Justice, would mean a 'hard' border between Northern Ireland and the Republic. To maintain free movement across that border would mean a softer Brexit, and inevitably compromise on Leave's objectives.

Impossible to resolve?  Let's see.


The fundamental problem is that the referendum question was not specific about the options that were feasible without being a member of the EU.  Maybe that was deliberate, to give the government wriggle room in negotiations.

The Government published a leaflet titled "Why the government believes that voting to remain in the EU is the best decision for the UK".  This was delivered to all households in the UK

This did not specifically say that leaving the EU would mean leaving the Single Market and Customs Union, but did state that only "Remaining inside the EU guarantees our full access to its single market".

Some people say that it was clear that leaving the EU would mean leaving the Single Market and Customs Union.  Indeed some people on both the Remain and Leave sides said that.  But there were also those who pointed at Norway and Switzerland as possible models for the UK's relationship.  It was all very confusing.

Ultimately though, the referendum question about leaving the EU did NOT rule out the possibility of remaining in the Single Market and Customs Union, like other non-EU countries.  Given the question was written that way, that flexibility was actually what people voted for.


The Tories have been talking about a 'hard' Brexit for some time. Many influential Tories simply want a complete break with the EU, at whatever cost to the economy.

A lot of people voted for Labour.  What has Labour said?  The manifesto says:
    • We will scrap the Conservatives’
    Brexit White Paper and replace it
    with fresh negotiating priorities that
    have a strong emphasis on retaining
    the benefits of the Single Market
    and the Customs Union – which
    are essential for maintaining
    industries, jobs and businesses in
    Britain. Labour will always put jobs
    and the economy first.
There  has been talk about "access" to the Single Market, other than membership.  Yes, all countries have "access", albeit under rules that are more or less punitive.  Now we have "benefits of".  John  McDonnell, the Labour Shadow Chancellor, has now said Labour would expect to leave the Single Market.  So what does "retain the benefits of the Single Market" actually mean? Nothing, it would appear.


It is not too late to realise that any form of Brexit would damage the economy, potentially seriously. Looks liek a  transition period of ten years or more where the economy would suffer, tax receipts would be lower, and essential services starved of funds.  "Project Fear" or just common sense?

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