The unexpected outcome of the recent referendum has left one set of people fearful of what lies ahead and a majority of people presumably anticipating that promises made would be fulfilled – not just more money for the NHS but wider promises of restored sovereignty and more control over our own affairs. Quite what one might expect to be new and different in going it alone in a complex global system is proving more difficult to articulate, for there are two painful truths. The first is that many of the ills that led people to vote ‘out’ are not simply down to EU membership but are wider manifestations of globalisation in which jobs, services, capital and people move freely, sometimes with highly disruptive effects. The second is that for most part, British aspirations are closer to Europe than elsewhere in the world as events in the Ukraine and Syria show only too well.
One curiosity of the Brexit debate is that Britain was time and time again trumpeted as the World’s fifth largest economy as an indication that it could stand alone, while ignoring that any economic position was achieved within Europe. Of course the relative size of the economy is no surrogate for strength, and Osborne’s swift abandonment of all claims to return public finances to surplus by 2020 says all that may be needed about the persistent difficulties of a high and recurrent budget deficit. Osborne may be right; there may be little time or opportunity to pay attention to these matters in the midst of negotiations on Brexit that threaten to become all consuming. Yet the structural weaknesses remain and may be compounded by the now tangible economic difficulties already generated by the referendum vote. Clearly negotiations on access to markets in the future, both in Europe and elsewhere, may be vital to British economic prospects.
On this, however, the ‘leave’ lobby has always propounded an unprecedented, and therefore probably unreal, position of access to the freedom of trade in goods and services but not in labour. In truth, a single issue, immigration, has come to trump all other policy considerations, even those relating to the economy. Yet the promises may be undeliverable. In any negotiation, the weaker party is the one doing the asking, and having now elected to quit the market, Britain’s future access to it is entirely dependent on the goodwill of its former trading partners. If access to that market is to be via the EEA, then access under the EEA Agreement is conditional on movement of peoples. Since EEA membership requires unanimity among all EEA member states, this conditions is unlikely to be easily dismissed.
One further promise of the ‘leave’ campaign was to free British business from red tape. Yet EEA membership is likely to demand compliance with all policy related to the single market. This includes competition and state aid rules, but also the horizontal policies in consumer protection, company law, the environment, and social policy. Some of these are the very areas which the leave campaign promised to abandon. To take the environment as an example, all areas of environmental law, with the likely exceptions of protected habitats and bathing water quality are likely to apply to business, as they did before.
In any case, as the legal work commences to action withdrawal from the market and to negotiate access to alternative markets, there will be little time for wholescale reform or deregulation in these areas. Indeed we are likely to find that leaving Europe dominates the policy agenda and means, in the immediate term, far more time spent dealing with the EU institutions than ever was the case before we voted out.