UK re-joins the Single Market

2021 Predictions

UK re-joins the Single Market

2021 Report


The 2021 Report predicted that the UK will re-join the single market within a generation, but not the EU.

Although this prediction might seem unlikely in today’s political climate, there is good reason to believe that current attitudes will change over time.

The Conservative party has appeared keen to double down on Brexit though there are signs of the beginnings of a shift. Media reports (denied by the government) indicate that the government may seek a Swiss-style relationship with EU but rule out re-joining the Single Market – even though a Swiss-style relationship would mean integration into the Single Market. Labour, seeing little to be gained in advocating much closer links to the EU, has shifted position to wanting to “make Brexit work”. Even the traditionally pro-European Liberal Democrats no longer want a fresh referendum on EU membership. In light of those positions, the prospect of much closer ties in the future might appear remote.

Liberal Democrat policy does, however, now advocate taking gradual steps toward the ultimate goal of re-joining the Single Market. It has published a four stage road-map to achieve this. Labour party policy is less ambitious. It envisages, as far as the world of work is concerned, visa-free travel for musicians and performers and mutual recognition of qualifications for professions such as accountants or architects.

The economic and political consequences of Brexit (or, in reality, of leaving the Single Market) are becoming clearer as the weeks and months go by. Influential Conservative MP Tobias Ellwood has broken party ranks to advocate a return to the Single Market and such calls are likely to increase. Many of the disadvantages of Brexit are also becoming clearer, including the significant economic consequences. Many will have also experienced the personal consequences such as the long queues at ports to leave the UK for France.

One quite likely scenario is that the Conservative party leadership will change direction after a heavy defeat at the next general election and the Brexiteers, who have significantly influenced government policy since the Brexit referendum, will be replaced by a new breed of Conservative politicians promising a fresh look at the UK’s relationship with the EU.

For some, leaving the shackles of EU regulation was the necessary precursor to a small-state, low tax, low regulation “Singapore-on-Thames”. Although Liz Truss’s short-lived experiment in pursuing these policies foundered primarily because of the introduction of unfunded and unpopular tax policies, de-regulation is likely to be tarred by this failure for some time. If de-regulatory policies are not pursued, arguably, the pro-Brexit arguments diminish further.

Alongside the impact of politics, attitudes to immigration have softened. At the time, restricting immigration was the principal reason behind the voters’ vote to leave the EU. Control over law-making came a close second. Re-joining the Single Market would, as far as the world of work is concerned, mean accepting free movement of workers. With the shortage of workers in many sectors and EU migrants, to a significant extent, being replaced by migrant labour from outside the EU, this may be increasingly acceptable, even to the many who voted Leave.

Although the Leave/Remain divide remains visceral and tribal for many, there is a gradual drift among voters towards considering it to have been a mistake to have left the EU.

Demographic shifts play a significant role in driving this shift. After education, age was the strongest correlator with voting in the referendum. As the younger generation with more international values replace older more nationalistic voters, support for closer links with the EU will increase. John Curtice, professor of politics at Strathclyde University and celebrated pollster, explores how the views and values of the younger generation, many of whom were not old enough to vote in the referendum in 2016, have and will change profoundly attitudes to Europe in the years to come.

However, none of this indicates a return to EU membership. That a clear majority think leaving the EU was a mistake does not translate into the same majority supporting another referendum. Many will consider the debate on the referendum closed. There is also force in the argument that a referendum on a matter of such importance should not occur more than once in a generation (25 years).

A point often made is that the vote to leave the EU was not a vote for any particular relationship with the EU afterwards. Some Leave supporters during the referendum campaign went on record saying leaving the EU would not mean leaving the Single Market. While a referendum would not be necessary, joining the Single Market would be inconceivable without a manifesto commitment from the party in question. This is probably 10 years away.

Re-joining or being re-integrated into the Single Market could be linked to re-joining the Customs Union, although it might be more palatable in circumstances where the UK remained outside the Customs Union (effectively the same status as countries like Norway or Switzerland). Outside the EU, the UK could enter into its own trade agreements and, though there would be some checks (as there are on the Swedish/Norwegian or French/Swiss borders), trade with the EU would be relatively seamless. Integration into the Single Market would also reassure those who opposed continued EU membership out of fears of greater European integration, including fears of fiscal union or common defence policies.

The UK would also presumably remain outside the Schengen document-free travel area which includes most EU members (but not Ireland, Romania, Bulgaria and Cyprus among EU members) as well as Norway, Iceland, Liechtenstein and Switzerland and most certainly outside the Euro-zone (EU countries except Bulgaria, Czech Republic, Denmark, Hungary, Poland, Romania and Sweden – Croatia joins the Euro-zone group on 1 January 2023).

However, there are three key challenges to re-joining the Single Market:

  • Free movement would need to be accepted (but sovereignty rather than immigration seems now to be the greatest concern of those opposing greater ties with the EU).
  • Outside the EU, the UK would be a taker, not maker, of Single Market rules. Norway, for example, is consulted on rule changes but has no say in the decision.
  • The EU would have to be prepared to accept the UK into the Single Market.

Changes elsewhere in Europe may help overcome the last two of these obstacles. Following his re-election, French President Macron pitched a change to the EU suggesting an outer tier forging deeper ties with the EU. His suggestion was focused on accommodating Ukraine into the European family but he expressly anticipated a post-Brexit UK being part of this outer tier. Since then, President Macron has proposed a looser “European nations club”. It is possible to foresee a two-tier grouping with the UK joining Hungary, Poland, Denmark, Norway, Switzerland and others, including perhaps Ukraine, in an outer grouping of largely non-Euro zone countries, with the core group pressing ahead to ever-closer union. 

Part 1 

DRIVERS OF CHANGE

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Part 2 

2021 EMERGING THEMES

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Part 2 

2022 EMERGING THEMES

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Part 3 

2021 PREDICTIONS

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Part 3 

2022 PREDICTIONS

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