Breaking up is hard to do

by Jack Schickler | 31.03.2016

Eurosceptics like to claim that, in the event of a Brexit vote, negotiations to leave the EU would be swift enough to inflict little damage on the British economy. Boris Johnson has airily suggested that “an initial period of dislocation and uncertainty” would be “followed by very rapid improvement” – an assertion often referred to as the Nike swoosh theory. Justice Minister Dominic Raab, noting that he himself “used to negotiate treaties”, says that “of course we’d strike a new deal” with the remaining EU nations – “and relatively soon”.

These sunny assurances are contradicted by former civil service chief Gus O’Donnell, who believes that leaving the EU could be a “very complex process” which we would have to negotiate on a “rather biased playing field”.

Neither side in this debate denies that there would be an immediate economic shock from Brexit; nor that, to quote Johnson’s own economic adviser, “most, if not all, economic shocks depress economic activity”. The debate is about how long this shock would last. On this point, the eurosceptics are overestimating how easy it would be to find a deal – and downplaying the damage done in the meantime.

The formal process for leaving the EU is set out in Article 50 of the 2007 Treaty on European Union. Plenty needs to happen. Most significantly, negotiating positions need to be developed among the remaining EU countries, and then those must be married with the UK’s position. Those other national governments will presumably, at some point, need to consult their own parliaments, if not their electorates. And finally the European Parliament needs to give its consent, as do a qualified majority of the remaining EU countries.

Precedent does not suggest this will be quick. O’Donnell cites Greenland, a territory with a “smaller population than Croydon”, which took 3 years to negotiate its exit from a European Community that had just ten members at the time. More recently, Canada offers an example of a single country that sought to negotiate a trade deal with the EU. It took seven years.

Of course, the complexity of the negotiation depends on the deal we want. If we were content with an off-the-shelf arrangement, such as the European Economic Area membership enjoyed by Norway, it could be relatively straightforward – and quick. But most existing models are not attractive, so many Brexit campaigners have argued we should seek an à la carte arrangement – “I want a British deal”, as Johnson put it. That would take longer to arrange.

As O’Donnell notes, all this will play out against an unfavourable political backdrop. France and Germany, facing 2017 national elections in which eurosceptic parties threaten incumbents, will not want to make leaving the EU look too easy. Equally, if elections lead to a change of government in either country, any progress in our negotiations might be lost as the new team reopened old issues.  

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    In the face of these realities, some commentators are reduced to tangential objections. Fraser Nelson, the editor of The Spectator, has attacked O’Donnell for suggesting that the UK would be up against a deadline. Article 50 lays down that negotiations must be completed within two years, with any extension to that timeline having to be agreed unanimously. Nelson objects that David Cameron could side step this deadline by delaying the formal notification of Britain’s intention to leave. This is technically true, though Cameron has stated that he would not delay. But the larger point is that the uncertainty for Britain’s economy would be prolonged and costly irrespective of whether Britain notified the EU of its intention to leave immediately or after a delay.

    In any case, disentangling ourselves from Europe would only be the start of our challenges. We would also presumably want trade deals with other, non-EU countries. Those could not simply piggyback on existing EU arrangements – and nor could we make them until we had formally left the EU.

    During the potential decade of uncertainty that might follow a vote to leave the EU, a British business looking to expand into Europe, or an international one looking to invest in the UK, could well choose to put their plans on hold.

    Neither Dominic Raab nor Boris Johnson could immediately be reached for comment

    Edited by Sebastian Mallaby