The EEA Option is still gaining traction (version 4.0)
This has now become like a diary of developments. Latest developments nearest the bottom.
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, likeEd 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 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.
Two other ‘EEA outings’ were then spotted in the latter part of May.
Firstly as part of a Newsnight discussion, where former British ambassadorCharles 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 onlyrealistic 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 now more to add to the list, the biggest of which was Ambrose Evans-Pritchard explicitly supporting Flexcit, Dr Richard North, and my ASI paper, in a Telegraph article published online on 1st June ready for the 2nd June newspaper edition. That prompted Toby Young to agree with Ambrose’s logic. And in the background, we saw Dr Andrew Lilico — who has previously noted the logic of an EEA transition — disputing Ambrose’s article in the narrow sense of how an EEA transition is done/communicated to the public. While “EEA Optioneers” see communication to the public as necessary to derisk Brexit, Lilico takes the view that this may sow confusion about transition vs destination.
But the point is that all these commentators are now agreeing the need for and the expectation of an EEA transition step. That is a big step forward.
On 4th June, we then had a particularly significant development. One of Remain’s long-standing thinkers, Charles Grant of the Centre for European Reform, agreed (unprompted) that the EEA could indeed provide a viable way out for Britain as Ambrose Evans-Pritchard had described two days before. Grant also completely understood that because of parliamentary arithmetic this was the most likely outcome after a Leave vote and that Boris and Gove would accept it.
To my knowledge, Charles Grant is the first Remainer:
a) to agree that the EEA interim option is a serious and viable option.
b) by implication, to recognise that the Remain campaign is in some trouble and that in the event of a Leave vote, the Remainers need a path and a game plan that avoids taking the ‘mad’ exit route sketched out by Vote Leave.
c) by extension, that means Remainers should not be attacking the EEA option as a viable route out because not only will they give voters the impression the EU is a prison with no viable exits (dangerous), but the Remainers also risk imprisoning themselves by their own rhetoric should there actually be a Leave vote.
That is why Charles Grant’s intervention is intriguing and significant.
****NEW ON MONDAY 8TH JUNE****
On Monday 8th June after another opinion poll showing Leave moving into the lead, Remainers in parliament came out and declared that they would indeed support exit in the event of a Leave vote BUT would vote to maintain the single market . The story was broken by the BBC’s James Landale and, significantly, top writer for the Remain campaign’s “In Facts” website, Sam Ashworth-Hayes, quickly agreed that he would also support exactly the same course of action.
That was all helpful but then in characteristic fashion, Dominic Cummings bumbled in declaring that MPs were saying they would ignore a Leave result. And a variety of Vote Leave figures, even supposedly liberal figures like Douglas Carswell, have piled in to say the same. But that is exactly what the Remain MPs were not saying, however such subtlety doesn’t fit the ‘Full Farage’ strategy that Cummings has adopted. The BBC laid it out rather clearly:
‘One minister said: “This is not fantasy. This is a huge probability.
“The longer we move away from the referendum, the more the economic pressures will grow to keep some links with the single market.”
Another said: “We would accept the mandate of the people to leave the EU.”’
Indeed they would. As I have long said, in the event of a Leave vote, the precise question on the referendum ballot will matter. A lot.
And so we are left with a 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 and now Remainers in general would choose a ‘soft exit’ to the EEA after a Leave vote, what is the purpose of a Vote Leave ‘plan’ that is now actively steering the public away from any possibility of an EEA transition?
Apart from frightening the horses and still risking outright defeat on 23rd June, that is…
