This article is written by Lord Peter Mandelson and was first published on 22 June 2017 in the Financial Times. The original article is here.
Of all the questions posed by the UK government’s evaporated parliamentary majority, the most important is what British voters now want from Brexit. One ‘softer’ than set out in Theresa May’s Lancaster House speech in January? Almost certainly, as polls now show. But what does that mean? And how do we work to turn ill-defined talk of softness into something concrete and politically acceptable both in Britain and Europe.
The first softening that has to happen straightaway concerns posture: clear acceptance that no deal would be a catastrophic failure rather than an assertion of UK confidence and machismo; a constructive tone on money and EU citizens’ rights that understands why a fair deal on these things matters as much to the union as it does to the UK; no more bluster about regulatory competition between us and the continent.
So much will be built on trust between the two sides, this tone cannot be more important. Flirting with unsustainable tough talk for domestic consumption will backfire — they read our newspapers. But the real issue is how to put fresh focus on an agreement that respects the will of UK voters while mitigating the job losses and sacrifice in living standards.
Mrs May called for a deep and comprehensive free-trade agreement. But the UK prime minister is not going to get it with her existing red lines, especially for regulated services. It would have to include a willingness by the UK to consider forms of regulatory alignment and enforcement with the EU, for example in finance and broadcasting, to maintain our privileged market access. Tying our standards to EU ones in return for market access is the essence of an intelligent debate about where regulatory autonomy and access to our largest market need to be balanced.
The government should put renewed emphasis on the hints in the Lancaster House speech that the UK wants to remain closely aligned with the EU in research, aviation policy and security. We should include Euratom in this. We should be clear that we see ourselves caucusing with the EU on everything from climate change and multi-lateralism in trade policy to global financial standards. We should maintain unified capital markets, even if that means binding the UK into close supervisory co-operation with the EU.
The government should proactively argue that taking back control of migration policy does not mean closing the door to visa free travel or ending an open approach to European citizens who want to work in the UK where the labour market needs them. Rejecting the principle of freedom of movement has to give way to a discussion about how it would work in practice.
The prime minister needs to deliver a Lancaster House Mark 2. Staying in the customs union is important, although originally ruled out in January in order to signal new UK autonomy in trade policy. There is no point in pretending this does not involve compromising the UK’s ability to set its own external tariffs — and by implication its ability to negotiate independent trade deals on goods. But meaningful trade deals of this kind will be hard to achieve and are, in any case, only one part of what an autonomous trade policy means. It would also mean compromise in aligning with EU product standards and in a common approach to industrial subsidies.
But these compromises need to be weighed against the benefits: eliminating tariffs with our largest market; no origin requirements for goods and components. Even aligning with EU standards has the upside of creating a level playing field in which UK firms can rely on mutual recognition in the single market. Staying in the customs union, or, to a greater extent in the single market via something like EEA membership, would mean losing some control over EU rules but retaining all the associated trade benefits of the single market. There is no simple answer here. But there is a necessary debate.
Finally, it is important to recognise that without such compromises a hard Brexit means leaving the EU without transitional arrangements and minus the clear prospect of a deep and comprehensive trade agreement. Such a cliff edge, and without the legal continuity provided by the Great Repeal Bill, would be a disaster.
The distinction between hard and soft Brexits has always been an elastic concept. It understates how much could be possible if the accent was put on innovative policy approaches, with a large injection of pragmatism and compromise, and a wider view of the UK’s role as an EU partner. Global Britain is all well and good. It is time to be a whole lot clearer about what a European Britain will look like in the future.