If there was any doubt about it, events of the past week have demonstrated that negotiations over Brexit will be difficult. They have also clarified the plausibility of the downside risk: failure to agree, followed by a brutal exit. Yet the decision to hold a general election has opened room on the upside. If Theresa May wins a large majority, as polls show, she will have an opportunity to manage a seamless transition to the post-Brexit future. Brexit will still be costly, but the costs will be minimised.
Even the jolts to the UK government ought to bring benefits. Above all, they should have taught Mrs May a great deal. She should have learnt she does not control whether details of the negotiations leak. She should have learnt she does not control the agenda of the negotiations. She should have learnt that these negotiations will be complex: the rights of citizens will not, for example, be resolved in one Council meeting. She should have learnt that the EU is prepared to demand large sums of money: up to €100bn. She should have realised, above all, that she holds a weak hand: the costs of no deal would be far bigger for the UK than the EU.
Some of what she has learnt may have come as a shock. She seems to feel that the EU is seeking to interfere in the general election. A wiser realisation would be that the EU does not much care about her fate or that of her country. The UK has united the EU against it.
At some point, however, Mrs May has to make a big strategic choice: is the UK, as the weaker party, prepared to settle the divorce largely on EU terms, with a view to achieving a smooth transition to the ultimate prize of favourable market access? The principal justification for seeking a large majority must be to give herself the freedom and the time to make that choice, against the prejudices of the most fanatical Brexiters.
If Mrs May wins a large majority in a five-year parliament, the possibility of a much more appealing transition opens up. The prime minister has made clear that when Brexit is complete, the UK should be outside the single market. Only then can the country control immigration from the EU and be outside the jurisdiction of the European Court of Justice. Yet the timing of the departure from the single market and of control over EU immigration is another matter.
With a tiny majority and an election not long after the exit in March 2019, it seemed politically inconceivable that she could agree continued membership of the single market in the transitional arrangement. But, with a huge majority until June 2022, such a transition would be far more plausible. Moreover, within this longer period, the final trade agreement might also be agreed.
With a strong mandate, the sensible approach in this negotiation would be to seek continued membership of the single market and the customs union, until a final agreement is reached. Mrs May ought to be able to get this through, even though it would mean accepting free movement and ECJ jurisdiction until that final agreement is reached. The advantage is that this would provide the smoothest possible exit from the EU. Jean-Claude Piris, former director- general of the Council of the European Union’s Legal Service, argues for a rolling one-year membership of the single market (and, I assume, customs union) until the final agreement is reached. That would bring large benefits to the UK and not insubstantial ones to the EU.
Naturally, there would be challenges. The UK government would have to get continued membership of the single market through parliament. It would have to agree to pay the EU a great deal of money. But the sums would be affordable (a net amount of up to 3 per cent of gross domestic product). Moreover, the EU entered into commitments on the assumption the UK would remain a member. That surely creates a moral obligation to pay a great deal. Finally, the UK would need to recognise the rights of EU citizens in the UK indefinitely. They came to the country on the assumption that they could stay. Their governments are right to protect them against this unexpected change.
For Mrs May, the aim of the election should be to allow her to make decisions in the national interest. With extra time and a larger majority (if achieved), she could make unpopular, but necessary, decisions. The past week will have shown her that these will be very unpopular. But if she obtained a smooth transition, via membership of the single market and customs union, until a long-term agreement is reached, she will have given UK business and so the UK economy what it most needs. Avoiding a big shock in 2019 is a prize for which it is worth paying a great deal. It is a chance the election could give her. She should take it.
