Myth: UK can be in single market without free movement
InFact: Every country that has full access to the single market has signed up to free movement. There’s no reason to think Britain could be different.
Every country which has full access to the single market has signed up to free movement. That includes not just other EU countries but members of the European Economic Area (EEA), notably Norway. Even Switzerland, which only has partial access to the single market, has had to open its borders.
The EU hasn’t shown any signs of softening its stance on the matter. A Swiss referendum in 2014 calling for a cap on immigration from the EU drew a warning from the Council of the European Union that “the internal market and its four freedoms are indivisible”. Switzerland now faces the dilemma of dropping its proposed controls on immigration, or losing privileged access to the market.
It’s possible to sign a free trade agreement (FTA) with the EU without accepting free movement.
But an FTA is not the same as full access to the single market. In fact, it is significantly inferior.
The FTAs signed by the EU lower tariffs, but they usually don’t eliminate them. Within the single market, there are no tariffs on any goods. Moreover, the single market liberalises investment across borders in a way that an FTA will not necessarily do.
Meanwhile, trade in services is liberalised comprehensively within the single market. This is not generally the case with FTAs, as Switzerland found. What’s more, no FTA has given a country a passport for its financial services industry to operate in the EU. Replicating such a deal wouldn’t be good for Britain, given financial services are responsible for nearly 10% of UK GDP.
Eurosceptics might argue that the UK, as the EU’s second largest economy, would get a better deal than the Swiss if it quit the bloc. But the EU would be unlikely to budge on free movement, as that could open a Pandora’s box.
France’s Front National would want an end to free movement. Switzerland and the EEA countries would also presumably demand equal treatment. Other countries looking to relieve themselves of burdensome commitments – say to join the euro, stick to fiscal targets or abide by EU competition policy – could threaten to quit the bloc unless they got special treatment.
Quite apart from not wanting the whole EU to be picked apart in this way, some countries such as Poland would want to keep freedom of movement with the UK as it directly benefits their citizens.
Eurosceptics have no basis for saying that Britain could quit the EU, dispense with free movement and maintain full access to the single market.
This article is adapted from a piece that previously appeared on InFacts.
Edited by Hugo Dixon