The UK and Europe
A hard Brexit is an admission of defeat
Marley Morris / Nov 2016
UK Prime Minister, Theresa May. Photo: European Union
A few months before the EU referendum, I was speaking to a group of voters in Havering, a suburban East London borough bordering Essex that voted heavily to Leave. Evaluating the prospects of David Cameron’s ill-fated negotiation – at that time still in the making – I was struck by the perspective of one middle-aged man. “I’m all for an open Europe”, he said, enthusiastically endorsing the principle of the single market, “as long as there are restrictions”. By restrictions, he of course meant limits on the free movement of people.
In the aftermath of the UK’s narrow vote to leave the EU, this account is emblematic of the government’s current dilemma. At its heart is the trade-off between maintaining close trading arrangements in goods and services (or ‘single market access’) and controlling EU migration. The EU is adamant that the ‘four freedoms’ of goods, services, capital and people are inseparable; while the UK cannot comprehend why migration and trade policies should be so intertwined. Yet, while the prospects might currently look bleak, there are critical reasons to keep all options open and search for a sensible compromise.
No doubt there is no easy solution to the trade-off – largely because the UK and the EU approach it from different political stratospheres. For the rest of Europe, freedom of movement is an integral part of the European project, one of its most widely popular achievements. And for many EU leaders – like Angela Merkel, who grew up behind the Iron Curtain in East Germany – freedom of movement is of huge symbolic value in its rejection of walls and borders across Europe. (While in many parts of the continent cross-border movement and work is a natural, everyday necessity.) But for Britain, freedom of movement is largely a source of irritation – even among many ardent Remainers, it is seen as the product of a continental obstinacy that paved the way for Britain’s divorce from the EU.
In light of these differences, there are recent signs that the government is coalescing around a notably hard-line position on migration policy to take forward for the Brexit negotiations. Reports have suggested that the Home Office has drawn up a proposal to introduce a system of work permits for EU migrants and place tight restrictions on EU workers by skill level, which has received support from a number of ministers. There are parallels with a paper by the pressure group Migration Watch from earlier this year, which advocated replicating the system for non-EU migration for EU flows. Such a proposal would effectively constitute the end of low and medium-skilled labour migration into the UK.
If the government were to enter the EU negotiations with a rigidly worked up policy like this one, the results could be drastic. First, tough restrictions on EU workers would have an immediate impact on employers that have begun to depend on a steady flow of migrants from Europe – in sectors like construction, hospitality, food processing, and agriculture. Estimates suggest that around 80 per cent of EU migrant workers in the UK who arrived after the A8 accession in 2004 would not meet existing visa rules for non-EU nationals if the same rules applied to them. While EU migrants currently living in the UK would most likely be protected from future changes, many workers come and go, staying only temporarily, and this supply would effectively be cut off under a new system. At the same time, it would not be straightforward to replace these workers, given employment levels are high, there is limited interest in these jobs from within the UK workforce (though this could change if pay goes up), and there are few alternative avenues to recruit low-skilled workers from outside the EU. This raises the possibility that these sectors will simply shrink as employers struggle to maintain their viability under a dramatic shift in conditions. Unless of course the government changes course and is simply forced to open up new migration routes for low-skilled workers.
Second, there is little hope of finding a way to make a migration system like this one compatible with a positive deal on trade in goods and services. The proposal is so far removed from any form of free movement that continued membership of the single market – or even partial membership, as in the case of Switzerland – would be out of the question. In practice, that would entail the end of passporting rights for financial service firms, a panoply of new ‘non-tariff barriers’ on trade, and potentially even tariffs on goods moving between the UK and the EU. The economic consequences of this should not be underestimated.
There is also a fundamental strategic argument for avoiding settling on a precise policy on EU migration at this stage in the negotiations. No-one can yet know how the nature of the discussions on Brexit will develop. Boxing yourself in from the start – by deciding the specific nature of what an EU work permit system should look like and working backwards from there – seems bound to end in an imperfect deal.
Instead, the government should take as flexible approach to the Brexit negotiations – and to its central trade-off – as possible. Of course, there must be a proper response to people’s deep-seated concerns about free movement. But at this stage, it should maximise the space for the possibilities of a deal that keeps the trading arrangements that currently work and at the same time answers people’s worries. Everything should be on the table. Yes, the government might be accused of wanting to have its cake and eat it by its EU partners. But the alternative is much worse. Deciding on a new migration system now could see us alienating our allies in Europe and careering into the hardest of Brexits simply by accident.
The fundamental paradox – can we be for open trade while demanding restrictions on movement – will of course not go away, and at some point the government is going to have to make some hard decisions. But to embark on a hard Brexit now would be an admission of defeat before the formal negotiations even begin. In our Havering session, the group I spoke to (who no doubt mostly voted Leave on June 23rd) spoke of their dismay and frustration at the current system for EU migration, but ended by agreeing that “we don’t mind free movement, as long as it’s movement for the right reasons and not for the wrong reasons” (such as for the pursuit of welfare benefits). Perhaps there’s more scope for compromise between the UK and the EU than it so far appears.