Into the darkness...

With Article 50 launched, the United Kingdom gambles its future on many unknowns

De Brexit is voor het Verenigd Koninkrijk een sprong in het duister: de gevolgen ervan zijn onbekend. Toch is de verwachting dat de problemen groot zullen zijn en tijd in beslag nemen om op te lossen. Tegelijkertijd loopt premier Theresa May het liefst weg van de onderhandelingen met de EU. Prashant Sabharwal, promovendus en aangesloten bij het Montesquieu Instituut in Maastricht, bespreekt de te verwachten economische en politieke consequenties van de Brexit, die volgens hem zeker niet moeten worden onderschat.

Freedom blared the headline of the Daily Mail, a reliably anti-Europe newspaper. Just reading that one word, one could have been forgiven for thinking that Britain had just been under the colonial yoke of an unforgiving oppressor – a period of subservience, the Mail headline appeared to suggest, that ended with the stroke of a fountain pen on the desk of the second woman to occupy the highest executive office in the nation. Alas, reality (much like common sense) has a bias towards nuance and the quiet truths than the tall claims of flashy tabloid headlines.

When Prime Minister Theresa May signed her name on the sixth page of her 29 March letter to European Council President Donald Tusk, she did not merely dryly notify the European Union of the United Kingdom’s intent to withdraw from the continental bloc – in accordance with Article 50 of the Treaty of European Union (TEU). Instead, the Prime Minister used the opportunity to propose a new arrangement between the United Kingdom and the rest of Europe. However, as the developments of the last few weeks demonstrated, it should have become clear to even the most optimistic Brexit advocate that it is one thing to campaign for severing all ties, but it's quite another to suddenly being forced to negotiate with the very bloc you vilified during the referendum campaign.

Make no mistake about it: The activation of Article 50, the first by any EU Member State, is a historical event. It also represents a leap into the darkness for the United Kingdom. All that is known is that Britain will, barring an unlikely extension (through unanimous consent of all remaining 27 EU Member States) leave the European Union on 29 March 2019. Like with any longstanding relationship, the issues that need to be dealt with prior to the United Kingdom’s departure from the EU are numerous, multifaceted and will take time to resolve.

As ever, in a long-standing, complex relationship, there is the issue of finance: a potential flashpoint may emerge in the European Commission’s calculation of the United Kingdom owing approximately €65 billion to the European Union. In essence, this Brexit bill consists of three elements: Britain’s unpaid share in the EU’s multi-year financial planning framework, cohesion payments (to poorer EU economies) and pension obligations. The EU Commission’s chief negotiator, Michel Barnier, insists that this point be address prior to any further talks on the terms of the United Kingdom’s withdrawal from the Union. In contrast, a House of Lords Committee found that (in pure legal terms), the United Kingdom could just leave the European Union without settling its bills (item 135, page 38) and without the EU being able to enforce any kind of payment demand against it. Political leaders from the governing Conservative Party rejoiced at this conclusion and even tried to claim that the EU owed Britain money [1].

However, in typical British understatement, the House of Lords Financial Sub-Committee added: “However, the political and economic consequences of the UK leaving the EU without responding to claims under the EU budget are likely to be profound”. Indeed, given that the UK currently exports 44% of its goods to the EU and that 53% of its imports emanate from the Union, Prime Minister Theresa May will be understandably keen to conclude some kind of free trade agreement with the EU. Not settling a bill, regardless of the final amount, would be an unprecedented act of bad faith that would poison the environment surrounding the withdrawal negotiations before they would even begin. The UK's negotiating posture has been complicated by the Prime Minister herself, as she stated in her Lancaster House Speech: "The principle is clear: the days of Britain making vast contributions to the European Union every year will end".

With that speech, the Prime Minister already revealed her hand and boxed herself into a bit of a corner, for she enunciated the following key principles:

▪ No membership of the Single Market

▪ No membership of the Customs Union

▪ No freedom of movement for EU citizens wishing to move to the UK

▪ No jurisdiction of the European Court of Justice in Luxembourg

In one speech, the Prime Minister thus rejected the most practical option, namely membership of the European Economic Area (EEA) – with or without membership of the European Free Trade Association/EFTA). Membership of the EEA would have necessitated permitting freedom of movement for EU citizens, something that Leave voters in last year’s Brexit referendum clearly seemed to be concerned about. Given the Prime Minister’s willingness to walk away from a negotiated agreement with the EU and let Britain trade under World Trade Organization rules instead, the long-term consequences of leaving the Single Market – so breezily dismissed by the most dexterous Brexit advocates during the campaign – are not to be underestimated [1] [2] [3].

Another vital issue to be considered is the status of EU citizens in the UK and British citizens in the remainder of the European Union. Without a deal, visas and work permits may become the norm for those groups in their host countries. Whilst ideas like a form of “associate citizenship” for British citizens living in the EU27 are probably closer to wishful thinking than legally compliant reality, both sides have expressed a desire to reach an agreement on the status of these permanent residents. However, in a resolution, the European Parliament has already underlined that it will not accept any type of cut-off date preceding the UK's departure from the EU in 2019. This is likely to constitute yet another red line for the May Government, once again as the Brexit referendum was centred on themes of sovereignty, limitations on immigration (which appears easier said than done) and restoration of control.

Finally, the UK will also need to deal with constitutional issues: Scotland is poised to launch a second independence referendum (even though this may be delayed due to disagreements between the British and the Scottish Governments) and Gibraltar has become a bone of contention between Spain and Britain. Meanwhile, in another constitutional development, the UK Government's Brexit department has presented a White Paper on dealing with the legislative impact of Brexit. This includes repealing the European Communities Act 1972 (the UK statute authorizing membership of the EU), in the form of a Great Repeal Bill (which would enable the UK Government to enact legislative changes in a fast-track procedure). Further, there is the status of the currently "soft" border between the Republic of Ireland and Northern Ireland (which is one of the four constituent nations of the United Kingdom, besides England, Scotland and Wales).

And this does not even start to address the many intricacies involved, whether they are aviation rights, the financial services industry and the effect on UK higher education. Mrs May could very well find that finishing Brexit may be a lot harder than starting it. It will certainly be a leap into the unknown.