Much of the discussion about whether we should be in or out of the EU focuses on which is the better end state. But, as in any divorce, we should also consider the break-up costs.
One is uncertainty about what form of access we’d have to the single market. The uncertainty could be extremely unsettling for business. If the electorate votes to quit the EU, that won’t resolve the matter. The people won’t have said whether they want a Norwegian, Swiss or Turkish option – or none of the above. What’s more, given that Cameron is campaigning to stay in, he would be under great pressure to resign. The first item on the agenda would, therefore, probably be for the Conservatives to choose a new prime minister – probably Boris Johnson.
Once a new prime minister was in place, he or she would then have to decide which sort of relationship he wanted with the EU. Given that the Leave campaign hasn’t spelled out what “out” would mean – and different members of it have different views — there’s likely to be a lot of wrangling to determine our negotiating position. Should Britain try to stay in the single market? And, if so, is it willing to allow continued free movement of people? If not, what arrangement will be put in place for Brits living in the EU? Will we be continue paying a contribution to the EU budget? Do we want to keep cooperating on counter-terrorism and participate in the European Arrest Warrant – and, if so, what arrangements will be put in place to handle that? These are just some of the issues the new prime minister will have to decide.
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What’s more, he or she would have to see if we could negotiate whatever was on the wish list. Under the process envisaged by the EU Treaty, we would notify the European Council – unless Cameron had already done this immediately after the referendum result, as he said he would in February 2016. We would then cease to be a member within two years, unless the Council and the UK agreed unanimously to extend this period.
But there’s no guarantee that a deal could be completed in that time and, if not, we would just have to rely on our membership of the WTO with its third-class access to the single market (see our briefing). What’s more, we couldn’t just change our mind and opt back into the EU if we got a terrible deal. Once we triggered the exit clause, Article 50 of the Lisbon Treaty, there would be no way back into the EU apart from by the unanimous consent of all other states. In other words, we wouldn’t have a strong negotiating position because we’d be under severe time pressure to get any deal.
Even after we quit the EU, there would be further legal and regulatory uncertainty. After all, the EU’s directives are now British law. Some eurosceptics will want to trash all of them. But there would then be chaos. There would no longer be a regime ensuring that the safety of chemicals, rules labelling food products, laws giving compensation to passengers for delayed flights and so forth.
In practice, we would have to decide one by one which laws to keep, which to repeal and which to amend. That would be another time-consuming process which would tie up government and parliament for years, diverting them from other tasks.
We would also have to renegotiate the 50 plus free trade deals that the EU has negotiated with other parts of the world and from which we now benefit. This would be time-consuming. It is unlikely we could finalise them all in two years, not least because our civil service would be up to its neck negotiating our divorce from the EU and because we haven’t done these sorts of deals since the 1970s. Given the damage to business from losing access to these trade arrangements, we’d be under a lot of pressure to replicate them fast – and that wouldn’t put us in a strong negotiating position either.
During the long period of uncertainty, firms would wonder whether to spend money here or switch production to the EU. This would affect British firms as well as foreign ones. Many would just sit on their hands. All this would be bad for the economy.
The idea that the grass will be greener if we quit the EU is an illusion.
This is an excerpt from “The In/Out Question: Why Britain should stay in the EU and fight to make it better” by Hugo Dixon.
Factchecking by Sam Ashworth-Hayes
This piece was updated on Feb. 27 to take account of the fact Cameron is now campaigning for Remain and to add detail on what would need to be negotiated if we vote to Leave