Accelerating Towards the Cliff Edge: A View from Brussels

Fabian Zuleeg | 3 April 2017

Dover – July 2012, Martin Hesketh, CC-BY-2.0

The end of March 2017 was historic in Brexit terms. Domestically, the great repeal bill entered the parliamentary process and the Scottish Parliament voted for a second independence referendum, followed by the letter from Scotland’s First Minister Nicola Sturgeon requesting the right to hold such a referendum by end 2018/beginning 2019, which is sure to be rejected by the Prime Minister Theresa May.

The UK notified the EU of its intention to leave, the so-called Article 50 notification, and the President of the European Council, Donald Tusk, issued the draft negotiation guidelines for the EU27 in response, most likely to be the substantial basis for the decision of the 27 remaining member states at the end of April. Unless there is a significant political upheaval in the UK, in two years’ time at the latest the UK will cease to be a member state.

Tough stance from the EU27

The draft negotiation guidelines seemed to come as a shock to some politicians in the UK although they did not contain anything especially surprising. The EU has repeated that a country leaving the EU cannot have the same benefits as an EU member. There will be no negotiation on the long term trade deal until the divorce agreement has been agreed in substance, including acceptance by the UK to pay a rather large (but as yet unspecified) legacy payment.

Any transition arrangement which provides the UK with continued access to the EU’s single market will imply that the UK will accept the obligations of membership – in effect, remaining an EU member without any rights and directly (if temporarily) contradicting the objective of ‘taking back control’. The issue of Gibraltar’s future being dependent on Madrid is also likely to create political difficulties in the UK.

None of this is new. In fact, the EU27 and the EU institutions have been consistent in their stance ever since the dust settled after the referendum in summer 2016. But within the UK, and within the UK government in particular, the expectation was raised that the UK could have its cake and eat it. Any legacy payment was portrayed as being, at best, a price worth paying for continued market access. A good deal for the UK was seen as easy to achieve, based on the unrealistic perceived strength of the UK position.

Given the bitter pills the UK will have to swallow, the reaction among the Eurosceptic press and from the Brexiteers within the government will become increasingly hostile to the continuation of negotiations unless Prime Minister Theresa May is successful in breaking the EU27 consensus. This is rather unlikely. The negotiation process is (deliberately) stacked against the country leaving, with, in effect, a ticking time bomb under the UK negotiator’s seat.

Even a bad deal is better than no deal, so the UK will have to come to an agreement within the two years; in effect the EU simply has to wait. Of course, it is also in the interest of the EU27 to come to an agreement. But for the EU27 Brexit does not come on top of their agenda; maintaining unity and the integrity of the Single Market is far more important. The negotiations are conducted through the Commission and even if there are individual countries with a different stance, the final decision on the deal will be taken by qualified majority voting as well as requiring the consent of the relatively hard-line European Parliament.

Will UK do a deal or go for ‘Brexfast’?

So in these negotiations the UK will essentially be confronted by the combined national interests of the EU27 as well as the overriding objective of European unity with very little incentive for softening the EU stance. Thinly-veiled threats about potential negative impacts on security cooperation or on economic damage to European companies will not be seen as credible – the UK has far more to lose. All this is not punishing the UK but it just reflects that the previous default position of automatic cooperation is no longer there. In effect, from now on, the UK will be treated as any other third country that has to adapt to the requirements of the EU. The level of power and control was always greater when being on the inside.

It remains to be seen in how far Theresa May can convince her party and the media that a deal where the UK is seen as conceding its red lines is the best the UK can achieve. If she can, it would open the possibility for entering real negotiations for a longer term comprehensive trade deal. But the risk is that domestic politics will override the long-term national interest. Agreeing what is seen as a bad deal is risky in terms of a Scottish independence referendum, hardly fulfilling the promises of benefits at least as high as under single market membership.

This might lead the UK government to choose the worst of all options: a ‘Brexfast’, a fast exit from the EU without any deal. This would imply maximum self-inflicted damage but might discourage the Scots from voting for independence if they end up outside the EU. In the end, it might be seen as the only feasible political route to deliver the promise of a hard exit and to keep the UK and the Conservative Party together. It is a risky proposition as it does not guarantee that Scotland will vote against independence and the mood might turn against the Conservatives subsequently but having now irrevocably embarked on the journey towards the cliff edge, the UK government might have great difficulties in finding an effective brake.

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European Policy Centre

Dr Fabian Zuleeg is Chief Executive and Chief Economist of the European Policy Centre. He is also Honorary Fellow of the Edinburgh Europa Institute and Advisory Board Member of the Scottish Centre on European Relations.