How to leave the EU without tanking the British economy: By adopting a Norway-style relationship
British voters have set their government a daunting task after last week’s referendum decision to quit the EU. Managing to leave the bloc and regain control over immigration without doing lasting damage to the economy and living standards requires consummate ingenuity. There is no time to wring our hands about how difficult it is. We should begin now looking for a road-map which will lead to an orderly solution.
Here, therefore, are a couple of thoughts about how we could both address the present uncertainty through careful sequencing and thus a longer timeframe for the discussions, as well as set a more positive framework for what many fear could be highly acrimonious divorce proceedings from which all would lose.
To begin with the framework, we should seize on the suggestion from Pierre Moscovici, France’s EU Commissioner, that Europe still needs to recognise the UK as a “valued strategic partner “of the EU.
This would immediately introduce a positive tone to offset the poisonous image and finality of divorce. It ought to be a no-brainer and hard to refuse. No one in Europe should want to admit openly that the objective is to make the UK anything other than a valued strategic partner.
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Indeed, there will be many areas in which the two sides can and should continue to cooperate. It is also quite dangerous to talk, as some do in Europe, of punishing the UK to deter others from going down the same route. That only tends to confirm the impression of the EU’s critics that it is led by an autocratic and out-of-touch elite which is contemptuous of ordinary people.
Second, both sides have an interest in avoiding a crisis that could easily undermine the euro as well as the pound. That requires an orderly transition with a longer timeframe, while still allowing for exit without unreasonable delay. The UK should therefore make it clear from the outset that, while it would definitively leave the EU within two years of invoking the famous Article 50, its departure would be followed immediately by a transitional stage, during which it would buy into a Norway-style solution for a limited period of five years.
That would create time for the UK to work out what sort of permanent trade arrangements it needed and negotiate them accordingly. Such arrangements might involve a continuation of the Norway agreement, but would not necessarily have to.
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This arrangement would give business certainty of access to the Single Market for a total period of seven years from the point at which Article 50 is invoked, and of course European companies would enjoy reciprocal export rights to the UK. That should be long enough to limit the short-term economic shock. The actual exit negotiations would be simpler and focus on the technical and administrative arrangements needed for departure, such as rights of abode. By adopting a transitional Norway solution, the UK would be able to plan carefully for its future rather than scramble to make arrangements on the hoof.
Admittedly there are disadvantages. There would be a longer period before the UK finally won back control over immigration (though given the vilification to which some have been sadly subjected in the wake of the vote, it seems unlikely that many more East Europeans will now be rushing to come to the UK). Presumably, London would also have to contribute to the EU budget just as Norway does, and it would not be able to do anything about directives and regulations introduced by the EU during the transition period.
However, there would be time for all to adjust and the UK would no longer have to replace all the existing EU-inspired laws and regulations in an impossible hurry. So there would also be a high degree of continuity in regulation.
There is now no perfect solution. This avenue would still be tough and expensive for the UK and require statesmanship by the EU. But it would be an opportunity for the EU to show that, amazingly enough, it can sometimes deal sensibly and constructively with difficult problems.
It is no credit to Westminster politicians that they are currently almost wholly consumed by internal party politics. They need to snap out of this self-obsession and start thinking positively about real solutions for real people. Voters are entitled to no less.
This article was written in a personal capacity.