The EEA Option is still gaining traction
On 19th April, we read John Springford and Simon Tilford writing in the Telegraph saying that in the event of a Leave vote, the EU will “play hardball” and only agree to the UK stepping out to the EEA, otherwise it’ll be “no deal”.
Springford and Tilford know a thing or two about the EU mindset and how it operates. As they noted…
“EU leaders will force a Brexiting prime minister to choose between two options: membership of the European Economic Area, or nothing.”
This came a month after we received the first hint that civil service officials were taking a serious look at the EEA Option to provide a smooth transition out of the EU.
As the Telegraph tantalisingly noted at the time after talking to civil service officials:
“It is likely the UK would adopt a model similar to Norway’s as holding position, before gravitating to a more bespoke arrangement, according to one scenario under discussion”.
This all came on top of my and Ben Kelly’s own take on this subject, respectively here and here, which essentially states that no British Government supported by the Civil Service would logically take any other route as those other paths come with more risk than is politically acceptable or saleable. And in the context of a governing Conservative Party with a small majority and over half its MPs supporting Remain, along with the overwhelming majority of Remainers across the House of Commons who will be voting on any deal, nothing but the EEA option comes anywhere close to being feasible. Additionally, it is an option that many key figures within the Conservative Leave movement are rightly relaxed about.
We also had the Treasury report on the impact of Brexit, allowing George Osborne to make some absurd assertions about the different options, including a particularly silly assertion about the EEA option (which Allister Heath described as “especially preposterous”) and for which a colleague wrote a detailed rebuttal (here). What was also remarkable is that the latest Treasury report on the short-term impact of Brexit notably avoided the EEA option altogether. This omission was picked up by several commentators, like Ed Conway of Sky News, who described EEA as “the most likely deal” after a Leave vote.
For me, this was yet more proof that the EEA option really frightens them.
We also had a short report emailed out in April by Douglas McWilliams at the Centre of Economic and Business Research saying something very similar about the route out:
“What might happen if the UK leaves? In theory it is highly uncertain but there are transitional arrangements that have already been negotiated and my best guess is that these transitional arrangements will largely determine what actually happens. I am assuming that the most likely outcome would be that the UK stays in the Single Market and therefore has largely to accept existing EU trading agreements and migration rules as well as product regulations. The UK would probably want to rejoin EFTA and negotiate through EFTA on future developments. There would probably be some (small) net Budgetary contribution but a saving of at least £500 million a year in net contributions and more on the gross contribution. The UK would not be in the Common Agricultural Policy or Common Fisheries Policy and would benefit accordingly.”
In my view the report then went overboard in suggesting a downturn of two years. Yes there will gyrating markets in the immediate aftermath of a Leave vote — these come and go in normal times — but the realisation will quickly dawn that Westminster politics is now taking over again after the people have had their say, and anything said by Vote Leave in the heat of the campaign will largely fall away as the reality kicks in of a pragmatic exit protecting UK single market arrangements. And that’ll be for all the reasons I and Ben Kelly have set out about the Westminster realities on June 24th, whether or not someone like Boris Johnson or Michael Gove then becomes Conservative leader. But that unfolding scenario will also be driven in part by precisely those gyrating markets and the realisation within Westminster that speed is of the essence, which also massively favours the EEA option.
So we were left surveying a growing momentum around the EEA option during April.
Two other ‘EEA outings’ were then spotted in the latter part of May.
Firstly as part of a Newsnight discussion, where former British ambassador Charles Crawford noted it as the most likely first step in a journey out. This was picked up by the programme’s reporter, Chris Cook, who noted in a blog that Whitehall officials now believed that such an EEA step was the only realistic option.
Then Allister Heath re-entered the frame in dramatic style, firstly by citing my work about the EEA Option for the Adam Smith Institute inside a broader article about economists. And then on 27th May, diving fully into the EEA Option in the Telegraph’s lead opinion piece.
And so we are left with the question: If serious commentators, the civil service, the EU, along with a semi-Remain Conservative party and the vast majority of the House of Commons would in all likelihood choose a ‘soft exit’ to the EEA after a Leave vote, what is the purpose of a Vote Leave ‘plan’ that says something different? Apart from frightening the horses and risking outright defeat on 23rd June?