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Courtesy of the Telegraph.
Let battle commence! Over the next month or so, a true war of ideas will be fought across Europe over how best to accommodate Britain after Brexit while simultaneously revivifying the bloc’s own flagging fortunes. Because for all the bluster from Brussels, the 27 EU nations that remain after Britain’s departure in March 2019 are still a very long way from sorting out the basic conundrum thrown up by the UK’s vote to leave. Do not be distracted by how comprehensively the EU won the first round of the negotiations (which they did) because history will show that was the easy part; a mere trifle of housekeeping that cleared the decks for the real discussion to follow.
Winning a €45bn divorce settlement and solid terms for the 3.2m EU citizens in the UK does not change the reality that Brexit leaves a €13bn-a-year hole in the EU budget and the world’s fifth-largest economy (and Europe’s main financial centre) still on the EU’s doorstep. This is a divorce where both parties are condemned to live next door to each other, and do business with each other, in perpetuity. The reality is that whatever the eventual terms of the EU-UK trade deal, the UK and the City of London, is not going to go away. This is all too easily forgotten in the increasingly bitter exchanges that characterise these divorce proceedings. As in all divorces, there is fault on both sides: Barnier niggles, team Juncker leaks, but equally Johnson and Davis goad the EU with witless and self-defeating regularity.
But taking even a moderately long view, there is a serious danger now that in all the rising short-term frustration and mistrust, Germany and France are about to get Brexit seriously wrong. Britain is not Trump’s America, nor is it Kaczynski’s Poland or Orban’s Hungary - we are not rippling up climate change accords and international trade rules, nor are we assaulting the rule of law or establishing a kleptocracy in plain sight. It is the UK that has always faithfully implemented EU directives, often with gold plate; it has striven to green its energy mix, driven EU-wide liberalisation in services, lobbied for the completion of the digital single market and against tax dumping. None of this is changed by Brexit. Just as financial markets often over-react to bad news, there is now a risk of a political over-shoot from Brexit on the European side.
There are already clear signs of dissent from some EU members states - including large ones like Italy and liberal free-traders in the Nordic region - that the Franco-German line on Brexit risks causing unnecessary damage to both sides. Read between the lines of British ministerial pronouncements of late and it could be hardline Brexiteers who end up disappointed by the 'managed divergence' model, not the EU. Germany and France strongly disagree. Emmanuel Macron - a politician whose personal brand is build on bearding the populist tiger - has warned smaller EU states of the “prisoner’s dilemma”, where they put short-term interests over long-term stability.
German officials believe that dissenting states will be silenced when they understand that enforcing the EU’s ‘level playing field’ - i.e. stopping the UK from seeking regulatory advantage - they will fall into line. Europe should be careful what it wishes for. Britain has no wish to become ‘Singapore’ off the coast of Europe, it clearly wants to stay ‘aligned’ in many areas given what Philip Hammond calls the “extraordinary levels of interconnectedness” between the EU and UK. But the Franco-German approach, which is backed by the European Commission, risks precipitating just such an outcome if it is not tempered by the wise counsel of other member states.