Brexit – What are the options for the UK now?

By Prof Phil Syrpis, Professor of EU Law (University of Bristol Law School).

In the light of the resignations of David Davis and Boris Johnson, it is time to reexamine the state of play in the Brexit negotiations. In this post, I seek to identify the various possible outcomes, and to provide some comments on the political ramifications of each.

The list of possible outcomes is almost as long as it was in March 2017, when Article 50 was triggered. That in itself is a cause of huge concern. What is also worrying, is that there does not appear to be a clear path to any of the possible outcomes.  

The structure of the negotiations

It should be remembered there are two elements in the withdrawal negotiations. First, by March 2019, the EU and the UK are aiming to agree a withdrawal agreement. They also hope to reach agreement on a ‘future relationship’ deal, which, according to Article 50, is to be taken into account in the withdrawal agreement. Received wisdom is that the withdrawal agreement has to be agreed by October 2018 (or at the very latest, by the end of 2018), in order to allow for ratification in the UK, the European Parliament, and, as necessary, the EU-27, by the end of March 2019. The key questions for the withdrawal agreement are i) money (the ‘divorce bill’), ii) citizens’ rights (for EU citizens in the UK, and UK citizens in the EU on Brexit day), and iii) Ireland.

In the course of the Article 50 negotiations, it has been accepted that there will be a transition (or implementation) period immediately following the UK’s departure from the EU. The agreement on transition forms part of the withdrawal agreement. There is some clarity here: during the transition period, scheduled to last to December 2020 (and possibly to be extended further as necessary), the UK has agreed to be bound by all EU rules, though it will, from Brexit day, no longer participate in the EU’s institutions.

No deal

The first outcome to consider is ‘no deal’. If it is not possible to reach agreement on withdrawal, the UK will, via the operation of Article 50, exit the EU without a deal in March 2019. That would inexorably mean: no ‘divorce bill’ settlement; no protection for citizens’ rights; a hard border in Ireland; and no transition. It would also mean (for example) no agreements on customs or regulatory alignment for goods and services, the end of the free movement of persons, and the end of cooperation in relation to defence. This outcome would be catastrophic for the UK, and indeed catastrophic for the EU too.

It is possible that individual agreements may be reached on some of the items on this list – and that some of the most unpalatable consequences would thereby be attenuated. But, a failure to reach agreement on withdrawal would have profound political consequences on both sides. It may irrevocably sour political good will; and make ‘side deals’ very difficult to achieve.

‘No deal’ is, however, a very real prospect. The reason is that the two sides do not seem close to reaching an agreement which answers the Irish border question. In the light of para 49 of the Agreement reached in December 2017, the EU formulated a ‘back stop’ proposal to ensure that there would be no hard border in Ireland. The commitment to no hard border in Ireland is important to the EU, to Ireland, and the UK Government. All parties agree that the ‘back stop’ will not be needed if a future relationship deal is agreed which solves the Irish border question. The ‘back stop’ proposal involves Northern Ireland remaining part of the customs union, and aligning with the rules of the single market in relation to goods, to the extent necessary for the Good Friday Agreement. The EU has insisted that the ‘back stop’ not be time limited. It has also made it clear that it is available for Northern Ireland only. But, if this sort of arrangement is available only to Northern Ireland, it necessarily involves the creation of a customs border in the Irish Sea. Theresa May has made it clear that no UK Prime Minister could accept that. We appear to have reached an impasse.

Avoiding no deal

Three ways to unblock this impasse exist; but there are practical and political obstacles in the way of each.

The first involves both the EU and the UK giving some ground. This route involves a modification of the current ‘back stop’ proposal. It entails an agreement to extend the ‘back stop’ offer to the whole UK, ensuring that the UK as a whole remains part of the customs union, and that the UK as a whole aligns with the rules of the single market in relation to goods, to the extent necessary for the Good Friday Agreement (see for example this proposal by Franklin Dehousse). This solution would effectively prevent the UK from seeking its own customs deals, and would involve the UK accepting the institutional obligations which are part and parcel of the EU’s single market architecture – in so far as trade in goods is concerned. It would not extend to the free movement of services (including financial services). On the EU’s part, this would involve an acceptance that the four freedoms are, in reality, divisible, and that alignment in customs and goods need not be accompanied by similar alignment in relation to services and people. The view of commentators is very much divided on this; many believe, and Michel Barnier has clearly said, that such a deal is not on offer. Those, including me, who think that it might be, point towards the exceptional circumstances (ie the real risk of a ‘no deal’ Brexit), to other situations in which the four freedoms have been disaggregated, to the undoubted hit that the UK would take in relation to financial services, and to the fact that the ‘back stop’ is intended only to last until it is possible to reach agreement on the future relationship.

The second, more straightforward route, would involve the UK agreeing, as part of a future relationship deal, to accept the full gamut of the EU’s customs and single market rules; essentially an EEA agreement (the so-called Norway model), with a customs union bolted on. Were the UK to make this commitment, the back stop would not be needed, as the future relationship deal would ensure that there would be no need for a hard border in Ireland. This would entail full acceptance by the UK of the rules of the single market (including in relation to the free movement of persons), together with oversight by the European Court of Justice (or a body, like the EFTA Court, with strong institutional links with the European Court).

The third, even more straightforward route, would involve the UK seeking to remain within the EU, for example by choosing to revoke the notification triggering Article 50. The main difference between this outcome and the Norway model described above, is that the UK would retain the representation it currently enjoys within the EU institutions; be able to play its part in the making of EU level rules, and to participate in its executive and judicial institutions. The biggest obstacle is, of course, the referendum result. The referendum is, in my view, treated with far too much reverence, especially given that the will of the people can and has been interpreted in many, mutually incompatible, ways. Be that as it may, the result is a fact, and, perhaps more importantly, Parliament voted to trigger Article 50 after the Miller litigation by a huge majority, and both the Conservative and Labour Party manifestos, endorsed by a huge majority of the electorate in June 2017, committed their parties to Brexit. Of the options on the table, remaining in the EU would, in the short term at least, be the most politically toxic.

So… where are we now?

The Chequers proposal – and it is important to note that to date, we have seen only a 3-page summary, represented a shift in the Government’s approach. It contained the beginnings of an acknowledgement of the trade-offs which anything other than a ‘no deal’ Brexit must entail. Admittedly, it passed breezily over the ‘back stop’ (at para 5), but it went on to make some proposals for customs and goods alignment with the EU. In some respects it hinted towards, but ultimately fell significantly short of, a proposal for a UK-wide ‘back stop’ (albeit as part of a future relationship deal).

As the events since Sunday night demonstrate, it was also a bridge too far for some in the Conservative Party and the Government; David Davis resigned (replaced by Dominic Raab at DfExEU); as did Boris Johnson (replaced by Jeremy Hunt as Foreign Secretary). Other Brexiteers may follow; in particular, as and when it becomes clear that the EU will not accept the Chequers plan without further concessions by the UK.

We are left in a position which is almost impossible to decipher. We may, very realistically, end up with each of the outcomes discussed above: a no deal Brexit if negotiations break down; a withdrawal agreement with a Northern Ireland-only ‘back stop’ (albeit that no Prime Minister could accept that); and a withdrawal agreement with a UK-wide ‘back stop’. It is also possible that we will reach agreement on a future relationship deal which dispenses with the need for a ‘back stop’: either a Norway type EEA deal, or an agreement to remain within the EU. Importantly, the paragraph 49 commitment means that the only ways to prevent no deal, involve what may be termed ‘very soft’ Brexit outcomes.

Some might be wondering about a Canada style free trade deal (there are a number of variations, which I will not consider in detail here). Under any such deal, the UK would be outside the EU single market and customs union; but would seek to negotiate advantageous terms of access. The more far-reaching the agreement, the more frictionless trade would become.  The problem with this approach is that it does not (given the technology we currently have) dispense with the need for checks on the border between the UK and the EU. Thus, it would not circumvent the need for a ‘back stop’. It would, provided the commitment that there be no hard border in Ireland survives, in fact only be possible to agree to such a deal for the future relationship, if it could, in some (as yet unspecified) way, be accompanied by guarantees that there would be no checks on the border.

What may come?

As things stand, I fear that no deal is the likeliest of all the outcomes. However, the economic damage it would inevitably bring, will mean that there is a huge incentive for both the UK and EU to come to any other outcome. The closer we get to March 2019, the more urgent our situation becomes. There is a very good chance to there will not be an agreement between the UK and the EU, to put to Parliament before March 2019. In those circumstances, it is important either that a standstill transitional period (in which all existing rules and obligations continue to apply to the UK) is agreed (even in the absence of any other withdrawal agreement); or better, for it is only in this way that the UK will retain its institutional representation, that an extension to Article 50 is sought.

Of course, standstill transition, or an extension to Article 50, would only defer the final decision. And the choices are, it seems to me, stark. Erstwhile remainers are split between those who favour the EEA/Norway option, and those who continue to fight for remain. Leavers’ views vary more sharply. Some welcome the Norway model. Others are determined to abandon the commitment to no hard border in Ireland and seek either a Canada deal, or a no deal Brexit.

It is a source of intense frustration that these stark political choices are not properly represented in the political debate. As a result of the fall-out from Chequers, we now see that the Conservative Party is split between those (like the Prime Minister) who seem to be inching slowly towards the Norway model (while not acknowledging the institutional implications), and those, like David Davis and Boris Johnson, who are likely, in the days and weeks to come, to argue for a much harder version of Brexit. The Labour Party has not responded fully to the Chequers proposal. We know that it is (quite rightly) sceptical about the viability of the Prime Minister’s plan, but do not know what course it would plot, given the opportunity. The temptation to allow the Conservative Party to tear itself apart, while continuing to appeal to both remain and leave voters, appears too strong to resist.

The danger is that too many people now believe that a ‘cakeist’ Brexit is possible; that it is possible to maintain all the advantages of (EU or EEA) membership, without the obligations which (EU or EEA) membership necessarily entails. It is not. I have already expressed my view – writing in October 2017 that Brexit should be stopped. The idea that there are political, economic, and social benefits associated with Brexit has been comprehensively demolished. And yet, the Conservative and Labour parties continue to proceed on the basis that there are benefits, and, what is more, that they are within relatively easy reach.

It is rash to make predictions at this febrile time. But I will nevertheless do so. One realistic possibility is that a centre ground political consensus emerges, in which the main parties coalesce around a compromise position somewhere between EEA membership and the PM’s Chequers Plan. The details will be complex, but it ought to be possible to reach this sort of agreement with the EU, and to deliver Brexit in a manner which avoids extreme pain. The other possibility is that the centre ground is abandoned, and that UK politics coalesces around two poles; with one side advocating remaining within the EU, and the other arguing for a much harder (Canada style, or even no deal) Brexit, with a hard border in Ireland. The events of the last few days appear to have made the first possibility rather less likely; what we have seen (yet again) is that compromise is not part of the Brexiteer playbook.

There is no shortage of voices calling for the UK to remain within the EU. But, to date, they have not had significant political traction. It is not at all clear that either the Conservative or the Labour Party is prepared to make the great leap, and to join the Liberal Democrats and the Greens in calling for the reversal of Article 50. Of course, any such leap would entail huge political risks. But, it would transform the nature of the public debate. In the days ahead, the first people to watch are Davis and Johnson; will they be willing and able to formulate a vision of hard Brexit? If they do, it is in my view very important that there is a strong counter-narrative, which explains the risks which hard Brexit will inevitably bring in its wake, and points instead to the very real advantages of EU membership.

The great comfort for those, like me, who are fearful about the consequences of Brexit, is that *any* concrete version of Brexit will, almost inevitably, enjoy less popular support than the abstract ‘leave’. The leave campaign made mutually incompatible promises; thus, any given Brexit will, almost of necessity, offend some of those who voted leave. And it is now no longer possible for those driving, or aspiring to drive, Brexit to avoid concrete realities. Instead it is time for all political groupings to agree on their vision for Brexit, and for those competing visions to be put to the test.