Time is running out to avoid the cliff edge
Government must show courage to steer away from a hard Brexit that will hurt the UK more than the EU
The prospect of the UK Government accepting a “no deal” (or “cliff edge”) scenario in the Brexit negotiations, as the Prime Minister recently confirmed remains a possibility, is something that must be avoided at all costs. To leave the EU with no agreement would have hugely damaging economic, social and, arguably, political consequences. A mutually acceptable withdrawal agreement is not merely advisable but absolutely essential.
The EU27 have made it clear that they will not discuss the future UK-EU27 relationship until the principles of the withdrawal agreement have been agreed. To have any reasonable expectation of avoiding the “cliff edge” in March 2019, agreement must be reached in 2017, preferably at the October European Council. Otherwise, we doubt there will be sufficient time to negotiate the UK’S future relationship with the EU and ensure a sensible transition.
The complacent view that no deal simply means the UK-EU27 reverting to trading on World Trade Organisation (WTO) terms is quite unrealistic. The immediate consequence would be an unprecedented level of legal uncertainty for individuals and businesses. What rules would apply, where and when, and what jurisdiction would have the competence to decide, would have to be determined in costly and lengthy court cases. It would impose an unacceptable human cost on EU citizens in the UK and UK citizens in the EU27, whose future would be left in a legal limbo.
The cliff edge scenario would see the reimposition of a “hard” border dividing the island of Ireland, which all agree could have dramatic political consequences. Current arrangements for free movement of goods, services, people and capital within the customs union and the single market would simply come to an end, in terms not only of customs but also, for example, of VAT, health and safety certificates and compliance with EU rules on issues such as data protection.
Goods and services would stop at borders and trade in many sectors – agriculture, fisheries, pharmaceuticals, financial services, energy and aviation to name but a few – would come to an abrupt halt. The UK would no longer be able to rely on the EU’S WTO schedule and on its existing trade deals, leaving it vulnerable in trade with countries outside the EU as well.
There would be no opportunity to negotiate mutually advantageous EU-UK co-operation across many policy areas – from Erasmus to European arrest warrants, from Euratom to joint international commitments, from research to judicial and security co-operation. Instead, the EU-UK relationship would be dominated by legal squabbles, increasing tariff and non-tariff barriers and arguments over the enforcement of citizens’ rights and obligations, without any of the economic benefits that come from continued co-operation.
Crashing out of the EU would damage the UK’S wider international standing, raising doubts about its reliability as a negotiating partner prepared to honour its international treaty obligations. Of course, this scenario would also hurt the EU27. That is why there is a clear wish on their part to reach a reasonable compromise. But the harsh reality is that the UK stands to lose much more.
Our view is that Brexit in any form would inevitably be damaging, but a “soft Brexit”, staying in the single market and the customs union, would do least damage, and would be vastly preferable to the crash over the cliff edge.
The UK Government continues to insist that its current approach to the withdrawal negotiations will deliver the best deal for the UK. We do not agree. There is a very real prospect that this will lead to the talks stalling, no deal being struck, and the UK facing the hardest of hard Brexits. So the UK Government must now have the courage, in the national interest, to do what is necessary to get a deal done. Leadership is needed, and time is running out.