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27/06/2016

Three plan Bs for Brexit

UK & Europe

Three plan Bs for Brexit

Cloudy skies gather over London.

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Three possible ‘plan Bs’ for Brexit are defined in research carried out by Michael Emerson, in a 24-page policy paper spanning a range of views, from which EurActiv publishes the Executive Summary.

Michael Emerson is Associate Senior Research Fellow at CEPS. He would like to  express thanks for helpful comments on this study to Roderick Abbott, Steven Blockmans, Jacques Pelkmans, Jean-Claude Piris, Marius Vahl, Guillaume Van Der Loo and Steven Woolcock.

Now that the results of Prime Minister David Cameron’s negotiations with the EU have become known following the European Council on 18-19 February 2016, and the date for the UK’s referendum to remain or leave has been set for 23 June 2016, it is time to clarify the consequences of this seemingly simple choice, in or out.

The ‘remain’ choice (Plan A) is fully known, consisting of the status quo, as marginally improved under Cameron’s four points. These improvements could only be marginal because basically the UK is ‘in’ what it likes (the single market and a full role in foreign policy and political affairs), and already ‘out’ of what it does not like (the euro, Schengen), and has special deals on other important matters (the budget and justice, as well as police cooperation). Also the government’s own research revealed abundant evidence that the sharing of competences between the EU and its member states was mostly ‘about right’, and the case for repatriation of EU competences back to the member states failed to gain traction.

Plan B, or the terms of secession, is in the immortal words of Sherlock Holmes “the dog that did not bark”. The ‘leave’ choice is unknown territory, since it has not been specified by the secessionists beyond vague statements like regaining freedom from Brussels and being able to engage in freer trade with the world at large. Since the posing of a choice between a ‘known’ and an ‘unknown’ is a big hazard for democratic deliberation, this study does some homework that the secessionists have been unable or not wanted to do. Three Plan Bs are defined, which span a range of views.

Plan B.1 corresponds to one popular sentiment to get out simply and fast, with a clean break on Day 1. This would mean scrapping all EU law, including all its international agreements, and thus create initially a huge legal void that would be unthinkably catastrophic for the economy, such that no British government would conceivably do this. Consequently, there can be no quick clean break.

Plan B.2 consists of quitting politically while staying within the single market and/or the customs union, and thus minimising economic disruption. This could be workable, since the mechanisms already exist and have been tested with some other non-EU countries. The problem here, however, is that it would mean still taking on a lot of EU policy without having a say in its making, i.e. a loss of sovereignty compared to Plan A (‘no say, still pay’, as some have dubbed it).

Plan B.3 therefore sees the UK trying to negotiate the best possible deals with the EU and its international trading partners. This however becomes a very messy prospect, with years and years of negotiation lying ahead in a climate of uncertainty over the outcome. The UK’s preferred deal with the EU would aim at maximum freedom of action including an end to the free movement of people, but at the same time retaining maximum continued access to the EU market for goods and services.

Negotiations with the EU towards this end, however, would be very problematic, encountering predictable objections to this ‘cherry-picking’ approach. As a result the UK economy would risk losing both its two ‘crown jewels’ – namely the preeminent position of the City in financial markets and the UK’s rank as the preferred location for foreign investment aimed at the EU market. Moreover, the idea of the UK replacing the EU’s international free trade deals with something better and faster is an illusion, since major trading powers will continue to view the EU as their priority, as our analysis shows in some detail.

The overall conclusion is that all three Plan Bs fail to come up with something preferable to Plan A, as a matter of cold calculation of concrete costs and benefits.

To this should be added the certainty that under all the Plan Bs the UK would lose status in international affairs in the eyes of the rest of the world. It would also inflict huge damage on the entire European project that has for half a century delivered peace and prosperity to the continent, a seemingly miraculous achievement after the preceding half-century of the worst hell that the modern ‘civilised’ world ever saw.

Last, but certainly not least, Brexit could also destroy the UK itself, leading quite possibly to Scottish secession, alongside risks also of unsettling the peaceful status quo of Northern Ireland in relation to the Republic.