14 September 2016

Brexit was always going to be the elephant in the room during Juncker’s State of the European Union (SOTEU)  speech this year. It was clear that he would say little on it directly, but that it would impact a huge number of areas which he touched upon – so it proved.

In terms of specifically addressing Brexit Juncker said that he “respected” but “regretted” the UK’s decision. He added that “unlimited access to the single market” requires adhering to the full four freedoms (goods, services, people and capital). While this is along the lines of what has been said before, the introduction of the word “unlimited” is interesting. As we have noted before, once you are no longer going for full single market membership (as we have explained is unlikely) the question will be to what extent the UK has to adhere to and gains access to the four freedoms. Looking at previous EU free trade agreements, the line is far from clear but it’s not a case of all four freedoms or no access at all. He then went on to reiterate this can’t be an “a la carte” approach – a statement which we’ve pointed out, similar to others, means little or nothing.

There was also a direct reference and warning over the recent murder of a Polish man in Harlow. Judging from the official text, this was the only scripted reference to the UK in the SOTEU, the rest (above) was ad-libbed by Juncker.

Beyond the specific references, the SOTEU as a whole was clearly targeted at member states and for them to put aside there divisions to present a cohesive front. It’s not hard to see how this links to the need for the EU to eventually reach a common approach to Brexit, though Juncker provided few ideas on how to overcome said divisions or that the Commission would back away from some of its hard-line stances which have exacerbated them. There were also a few points of content/policy that will be watched closely by the UK.

  • The first was a message he sent on what underlay the Brexit vote. Juncker spoke many times about better explaining what the EU does and about national politicians not blaming the EU for everything. This read somewhat as a message that part of the driving force behind Brexit was the lack of understanding in the UK around the EU and the misrepresentation of the role of the EU. This message is in stark contrast to that in Council President Donald Tusk’s letter to member states warning that, “It would be a fatal error to assume that the negative result in the UK referendum represents a specifically British issue…the Brexit vote is a desperate attempt to answer the questions that millions of Europeans ask themselves daily.” While there were certainly plenty of falsehoods around in the EU referendum, Tusk is right that it would be dangerous for Europe to ignore the many issues around the EU that were raised and which are clearly concerns in other states.
  • The second issue of interest will be the move towards a common military headquarters and policy. Whether or not the UK is in the EU, its foreign policy will be closely tied to and impacted by that of Europe. Secretary of State for Exiting the EU David Davis has warned in recent days that the UK will not accept anything that undermines NATO. Of course, how much the UK can do to stop any EU plans on this front remains to be seen. Linked to this is the issue of security and counter-terrorism. As we have explained before, Prime Minister Theresa May has historically been a strong supporter of EU cooperation on this front. As such, the new proposals for Europol and Frontex (the EU border force) will be closely watched and could still see some UK involvement.
  • Thirdly, policies such as the Capital Markets Union will still be watched closely by the UK. As the EU state with the largest capital markets by some stretch the UK’s exit could fundamentally change CMU. The question is whether the UK can and will still be involved from outside. This would be unlikely if the previous pushes to make CMU more focused on integration and harmonisation than breaking down barriers re-emerge and begin to set the agenda.
  • A final issue which will be watched closely is the idea of greater documentation and registration around migration. This links up with the reports ahead of the speech about a potential EU ESTA programme, similar to that in the US. Essentially, visitors from outside the EU would need to provide information and possibly pay a small fee before they travel to the EU (not a visa system). There were hints at such a system in the speech, albeit them vague, and given the UK might be subject to this post-Brexit its topic which will be watched closely.