Making the Most of Brexit

On 23rd June, 2016 the UK voted to leave the European Union (EU). The Government intends to invoke Article 50 of the Lisbon Treaty by the end of March 2017, initiating a two-year departure process. Barring unexpected developments, the UK’s 40-year membership of the EU will come to an end in early 2019.

Brexit could be implemented in a number of ways, but since Theresa May’s recent speech setting out negotiating principles, we have a better idea of what the Government aims to achieve. The UK will leave the Single Market; it will no longer be subject to the European Court of Justice; and is likely to retain only partial membership of the Customs Union. Doing so, it is believed, will fulfil the government’s aim of gaining control over immigration, not being subject to EU law, and being able to strike its own trade deals. While this sets out an intended direction of travel, there are many areas of uncertainty.

Moreover, we can distinguish two tendencies in the government’s approach to Brexit so far, which to some extent mirror the division between Remain and Leave camps: one is a defensive approach, aimed at minimising the risks inherent in Brexit. This sees Brexit as inherently dangerous and the task of negotiation as one of trying to keep as many of the benefits of EU membership as possible. Defenders see a successful outcome of the UK post-Brexit as fundamentally continuous with the UK pre-Brexit – business as usual.

The other approach is an aggressive one, in which we attempt to seize or demand the benefits we believe are rightfully ours. This focuses on the possible benefits of say, future trade deals outside the EU, or the corporate benefits of loosened regulations, while dismissing the likely risks involved. They see UK post-Brexit as fundamentally different, transformed (for the better) by its new relationship with Europe.

Neither of these is likely to be successful. The defensive approach is likely to focus excessively on retaining what we have, and preventing loss, rather than imagining and grasping the potential benefits to be gained by leaving. By being unambitious it risks achieving too little. On the other hand, the aggressive strategy is one which is more likely to seize possible opportunities but very likely at the expense of alienating European partners and generating unacceptable risks for the UK economy and society.

Instead, government should adopt a broader negotiating strategy which blends these two tendencies. We need to approach negotiations with a full awareness of both the opportunities and risks involved. This will then help inform a cooperative and flexible approach, utilising the support and expertise of civil society for negotiations with our European partners. Inevitably, choices and trade-offs will have to be made; these will involve accepting risks in exchange for grasping new opportunities.

The report also analyses the likely regional and sectoral impact of leaving the European Union. A summary of these findings can be read here.

This report is the result of three expert summits held in London during February 2017, with the support of the Friends Provident Foundation. They explored the risks and opportunities of Brexit for: Labour Markets, Social and Environmental Outcomes, and Industry, Trade and Devolution respectively, and were attended by academics, representatives from business and civil society, and policy-makers.