Report: ‘Deluded’ UK cannot afford to be smug on Brexit

By on 23/02/2017
Theresa May, prime minister of the United Kingdom

Britain is in a weak negotiating position and will have to win the goodwill of leaders in Europe if it is to avoid economic chaos following Brexit, according to a report by independent think tank the Centre for European Reform (CER).

With Theresa May set to trigger Article 50 in March, CER director Charles Grant has analysed the options available to the British prime minister as she hammers out a new economic relationship between the UK and the EU.

Grant sets out the views of officials in Brussels and the rest of Europe, many of whom believe that Britain is “deluded over the strength of its negotiating hand”. He says that “May and her ministers should conduct the talks in a sober, courteous and modest manner”.

“Once Britain triggers Article 50, it is in a weak position: it must leave in two years, and if it has not signed a separation agreement before doing so, it risks economic chaos.

“Grandstanding and smugness will erode goodwill towards the UK.”

Grant argues that Britain’s strongest negotiating card is its contribution to European security – via cooperation on policing, intelligence, defence and foreign policy. Threats to transform the UK into a low-tax, ultraliberal economy lack credibility, he says, and the importance Britain assigns to the City of London is misguided.

“Few EU governments regard the City as a European jewel whose sparkle should be preserved,” he says. “While some view it as a cesspit of wicked Anglo-Saxon capitalism, several others are keen to pick up the business that could leave the City post-Brexit.”

The policy brief, released on 20 February, says that one of the most striking features of the May administration is the centralisation of power in 10 Downing Street, with most key Brexit decisions taken by the prime minister and her closest advisers.

This has downsides for Brexit. “People in the inner circle may become over-stretched, so that important decisions are delayed. And centralisation may discourage the tapping of outside expertise,” says the report, adding that many people in May’s inner circle have a Home Office background, and her government lacks high-level expertise in areas such as the EU, diplomacy, economics, financial markets and business.

This increases the risk of Brexit policies emerging that are unviable, the report continues. One example given is the commitment in May’s long-awaited Lancaster House speech on 17 January for Britain to negotiate to leave the Single Market and the Customs Union and to hash out its future trading arrangement with the EU, all within two years. The report points out that free trade agreements usually take five years to negotiate and several more to ratify.

It does, however, concede that by confining decision-making to a small circle of trusted allies, May can avoid leaks of sensitive information, and incur “minimal foot-dragging from other Whitehall departments”.

EU officials now believe that the UK is on course for a ‘hard’ Brexit, says the report: they have concluded that the main domestic pressure exerted on May is coming from the Eurosceptic hardliners within her Conservative party.

Following the sudden departure of Britain’s EU ambassador in January, they also wonder if there remain enough officials willing to speak uncomfortable truths to power.

Discussions over the size of the bill to be presented to a departing UK – which could be as high as €60bn (£51bn or $63bn) – could also be a major sticking point, with European Commission president Jean-Claude Juncker warning this week that Britain could not expect a “cut-price or zero cost” exit.

Grant says that Britain’s Brexit ‘red lines’ – restricting freedom of movement and ending the jurisdiction of the European Court of Justice in Britain – are political outcomes, and will be prioritised whatever the economic cost. However, he sets out five reasons why May might end up pursuing a softer Brexit: Britain’s courts and parliament have been more involved than she would have liked; business lobbies are starting to get their act together; the economy could see a downturn, influencing public opinion; she may want to placate Scotland to prevent a second independence referendum; and senior government figures are now learning more about how the EU works, which could make them more sympathetic to its goals in the negotiations.

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See also:

New European Parliament president sets conciliatory tone on Brexit

May’s hard Brexit: starting position or ultimate goal?

Former UK chancellor condemns ‘idiotic’ Brexiteer lines on EU talks

Ripples around the world: Brexit’s implications for Europe and beyond

Responding to the Brexit challenge: a round table debate

Court ruling casts doubt on UK Brexit timetable

Bank of England governor to see through Brexit negotiations

 

About Tamsin Rutter

Tamsin Rutter is a journalist based in Brussels, Belgium. She writes on a variety of topics, including public services, cities, local and central government and education. She was formerly the deputy editor of the Guardian's Public Leaders Network and Housing Network.

One Comment

  1. Brian R

    24/02/2017 at

    Yet another pro-European ‘think-tank’. Notice that most of the article refers to what the EU ‘thinks’.

    “Grandstanding and smugness will erode goodwill towards the UK.” What goodwill? Every time Juncker & Co opens their mouths, it’s another threat. NO guarantees on the rights of British nationals. EU ‘citizens’ to be under the jurisdiction of the ECJ. Visegrad nationals to retain EU rights whilst in UK. A €60 billion leaving ‘fee’ not authorised in any treaty.

    Wonder how the UK/Great Britain/England managed for a thousand years without Europe? As opposed to the pitiful 57 years that ‘Europe’ has existed.

    The FACT is that the Franco-German Empire is contemplating the loss of its most politically-knowledgeable and connected ‘associate’. The second-largest financial contributor. The most powerful European military power.

    As the UK extricates itself from a 45-year failed ‘experiment’, there are bound to be difficulties and even financial problems. Providing a certain amount of fuel for those that are greedy for the crumbs that ‘Europe’ allows to fall from its table. Crumbs, incidentally, that the greedy provide in the first place but are too dumb to recognise. Where does ‘Europe’ get its money? It gets it from the import taxes charged on goods brought in. Import taxes that would otherwise go to the treasuries of the ‘members’. It gets it from the VAT charged on virtually everything. Taxes that would otherwise go to the treasuries of the ‘members’. It gets it from the money in the treasuries of the ‘members’. And when it gives ‘grants’? The money comes from the ‘members’ AND has to be at least matched by MORE contributions from the ‘member’. It is, in fact, a massive ponzi scheme. And the only ‘real’ beneficiaries are the eurocrats. With their inflated salaries and expenses, their massive ‘holidays’ from their 3-day working weeks, their eurocrat-only shopping malls, their inefficiency by moving from base to base every 6 months.

    This article is another con-job. There will be many more over the next two years.

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