The 5 likely paths for Brexit

We have a new Prime Minister. Turns out the Tories weren’t in a mess after all- where the Labour leadership contest has effectively taken around 9 months and may end in a bloody party break up, the Conservatives somehow managed to choose and appoint a new Prime Minister within two and a half weeks. In Theresa May’s recent statements- along with a series of aggressively centrist and, in a way, European ideas- one thing has stood out; she will, at some point, be triggering Article 50.

So we now know we’re at least going to start the process of leaving the EU, but that’s about all we know. There are five logical paths from here, so far as I see.

  1. Article 50 is triggered before 2018 and the UK leaves the EU. To meet the promises on sovereignty, especially regarding EU law, freedom of movement, and the EU budget, the UK doesn’t join the EEA. It is extraordinary likely the UK would arrange a Canada-style bilateral trade deal with the EU rather than pay tariffs under WTO rules. This would bind the UK to some EU regulation, but crucially not free movement.

    Where the UK would escape tariffs, travel to the EU for work or holiday would be far harder and far more expensive, some kind of border controls would be put up in Northern Ireland, and Britain would lose a lot more political influence.

    Despite escaping tariffs, the economy would also suffer as non-monetary barriers to trade would make it harder to export, more expensive to import, and reduce FDI. De-synchronised regulation- the regulation which is the bedrock of all that pesky EU law- would make the EU progressively harder to trade with, especially in financial services and in supply chain manufacturing. London would cease to be Europe’s financial capital, and a lot of manufacturing jobs would go.

  2. Article 50 is triggered before 2018 and the UK leaves the EU. The government decides that EEA membership is the best economic option, but struggles to justify offering a solution which requires the UK to follow EU law, accept free movement, and pay into the EU budget. After all, the UK rejected these things at referendum- they are unlikely to accept them, while losing the UK’s seat at the table, MEPs, commissioners, and voice.

    As so, the government would likely be forced, by Eurosceptic rebels, to hold a second referendum. Depending on the economic consequences of Brexit, it is likely EEA membership would win. If not, revert to option one.
  3. Article 50 is triggered before 2018, and the UK leaves the EU. Kind of. The Germans have already said they’re open to the UK claiming associate member status and thus securing a handful more opt-outs while receiving a handful fewer benefits. Little would actually change, while the referendum result would technically be honoured. Perhaps Theresa May could finally pull us out of the European Human Rights Act. In a way, it would be perfect for reluctant-Remainer May.

    However it would face stiff opposition from any likely French government, where worry about post-Brexit contagion in Italy, Spain, Greece, the Netherlands, and even France is very real.

  4. Article 50 is triggered after 2018, and the Conservatives win a plurality in the next election. The Lib Dems have committed to blocking Brexit as one of the terms of any coalition deal, but it is unlikely Tim Farron seriously believes the Conservatives would agree to unilaterally drag the UK back into Europe, ignoring the referendum result.

    Where Article 50 (where un-tested) appears have no get-out clause once triggered, it is a political mechanism in a political union and, as so, can almost certainly be cancelled through political means should Britain have a change of heart.

    It is therefore likely that both sides would seek to compromise, and agree to move towards some kind of second referendum. There would likely be a second re-negotiation dance, as unsubstantial as Wilson’s and Cameron’s. Depending on the impact of the referendum over the next 2 years (of capital flight and broken promises), either side could win. If Leave wins again, we revert to scenario 1. If Remain wins by a narrow margin, we may see an unprecedented political re-alignment.

  5. Article 50 also triggers a second independence referendum in Scotland, which the Nationalists win. Where the referendum is incredibly likely, the result is certainly no forgone conclusion yet, but should Scotland choose to be independent rather than leave Europe things get even more confusing.

    An independent Scotland likely meets the Acquis Comminutare, and the SNP may be able to convince the Spanish to refrain from vetoing an independent Scotland’s accession. Within 5 years, Scotland could be back in Europe.

    Should this happen, it is likely Northern Ireland- and perhaps London- would seek a special status within the UK which would allow it to remain part of the EU, or join Scotland in either independence or a different union. The legality of such a deal has clearly not been tested, nor is it clear there is any way in which this would be allowed by either the rUK or the EU. The political turmoil these calls would cause, with the UK divided in way it perhaps has never been before, would lead to an unprecedented social and economic crisis from which the UK’s constituent nations may take decades to recover.

    The implication for the UK in Europe without Scotland, and with Northern Ireland marginalised, is notable. England and Wales voted overwhelmingly for Brexit. If you also take London out of the equation, through special status or some unforeseen and unlikely other means, it would be virtually impossible for any Prime Minister to seek any deal which would impose any European regulation at all. This would mean even a bilateral trade agreement is off the table, and the only logical path would be trading under WTO rules.

I’ve become a bit wary of making predictions this year. A Tory majority, followed by Corbyn, followed by Trump, followed by Brexit, I’ve got an awful lot wrong. I will therefore leave it at 5, and speculate no further. I do, however, know Theresa May was the best of those who put themselves forward for the job by far, and fares the best chance of handling whichever option her government decides upon in the best way possible.

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