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21 July 2017
Is the United Kingdom trapped between a rock and a hard place in the current Brexit negotiations?
Many commentators believe that fears about high levels of immigration played a significant part in the Leave campaign's victory in last year's referendum on EU membership. Prime Minister Theresa May has made it clear that "taking back control" of immigration is non-negotiable. Accordingly, ending free movement of persons is one of the "red lines" she will apparently refuse to cross in negotiations.
The government and UK businesses also want the United Kingdom to have maximum access to the single market, but the European Union has stated that single market membership is conditional on allowing free movement of persons. The European Union is adamant that the 'four freedoms' – freedom of goods, services, capital and persons – cannot be separated. There appears to be no pick-and-mix option for the United Kingdom.
This clearly points to an impasse. Making May's dilemma even thornier is the fact that the United Kingdom needs high levels of immigration in many sectors – such as agriculture, construction, retail and hospitality – due to an insufficient number of UK workers who are prepared to accept those jobs at their current rates. Raising salaries might attract more UK workers, but this would make goods and services more expensive and exports less competitive.
Is there a viable way forward? There are a number of possible compromises, whether temporary or permanent, that could allow the United Kingdom to continue to participate in the single market while retaining at least some control over migration.(1) These are:
A separate question is how far any of these possible solutions would be politically achievable.
The existing EEA agreement and the potential safeguard measures it contains would provide the most appropriate template for the United Kingdom and the European Union to reach a transitional agreement before the United Kingdom's Article 50 notice expires (ie, the third option in the list outlined above). This has sometimes been referred to as the 'Norway model'. A transitional arrangement of this kind would have various advantages:
While the Norway model would not represent an attractive long-term arrangement for the United Kingdom, it provides a template for a viable and achievable route to a temporary solution that is potentially of major benefit to all parties.
In the longer term, the United Kingdom could seek to negotiate more specific arrangements on EU migration as part of a more complex, bespoke trading agreement with the European Union. Estimates say that this process would take between five and 10 years, during which period there may be significant changes in the political landscape that affect the options available to the United Kingdom.
For further information on this topic please contact James Davies or Natasha Hotson at Lewis Silkin by telephone (+44 20 7074 8000) or email (firstname.lastname@example.org or email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
(1) For a detailed report please see here.
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