Brexit means Brexit
The new UK Prime Minister, Teresa May, has made it clear that although she did not vote to leave, that there will be no attempt to remain inside the EU or to return by some backdoor mechanism, like a second referendum.
So the only question to be answered is what kind of divorce will it be?
The answer to this question will depend on the extent to which the negotiations can achieve a balance between the value to the UK of access to the single market versus the pressure to control immigration.
The biggest issue to be sorted out is how trade will be managed between UK and EU – so what are the options:
- ‘Hard’ exit – UK does not participate in the single market and relies on the World Trade Organisation rules for trading with EU or negotiates a completely new bilateral trade deal with EU.
- ‘Soft’ exit – UK joins the European Economic Area (EEA) which is made up of EU member states plus Norway, Iceland & Liechtenstein. EEA provides for free movement of goods, services, capital and people; however, participation in the single market comes at a financial cost and requires free movement of people, two of the main arguments for leaving the EU.
The Brexiteers would probably have a preference for the Swiss model – UK joins the European Free Trade Association (EFTA); access to the EU market is governed by a series of bilateral trade agreements by economic sector. Switzerland is excluded from certain sectors, most notable Financial Services.