26 September 2016

Brexit is not black or white but shades of grey

The first point to make clear is that I don’t particularly care for the terms hard Brexit or soft Brexit. Partly because they don’t mean much – something I’ll attempt to address – but also because they oversimplify what is an incredibly complex process and imply that Brexit is quite a black or white choice. In fact it is made up of a huge number of shades of grey. This is partly because whether a Brexit is considered hard or soft is not simply down to the content – itself a vast array of possibilities – but also down to the timeline. This means it includes considerations over how long the negotiations will take in total, whether a transitional arrangement of some form might be needed and when Article 50 should be triggered. Furthermore, it also distorts the focus of discussions onto inputs when really it should be about outcomes.

These terms have also quickly become associated with positive or negative connotations depending which side of the Brexit debate you are on. Remainers tend to see a soft Brexit as a good thing as it seen as cushioning the blow and trying to stick close to the EU. For similar reasons, Brexiteers see a hard Brexit as positive as they see it implying ending any kind of EU oversight and supranational authority.

Even just over the past weekend we have seen the array of differences. On the BBC’s Andrew Marr show yesterday Labour leader Jeremy Corbyn warned against a ‘hard Brexit’ due to the impact it would have on manufacturing – implying the imposition of tariffs and that hard Brexit meant falling to WTO rules. However, Lib Dem leader Tim Farron has been clear that a hard Brexit means anything other than full single market membership. Former Chancellor George Osborne warned against it but without defining what his preferred option is. All this highlights that they are inherently subjective not objective terms.

But, given they are being used, it serves to try and define them. Just saying hard or soft is not alone sufficient to describe Brexit and as such I’ve introduced greater variation. (These are not attempts to lay out detailed analysis of each, nor stating which are good or bad, but just the broad outlines).

  • Very Hard Brexit – This would involve falling back immediately on WTO rules. The UK would trigger Article 50 immediately (or as advocated by some just repeal the 1972 Act). It would not seek to negotiate any new agreement with the EU and would begin imposing WTO rules straight away (though this itself requires some potentially complex negotiation as we’ve explained).
  • Hard Brexit – This would be characterised by a swift but minimal free trade agreement, with Article 50 being triggered in the near future. The FTA might lean more towards the style of earlier FTAs which focused on basic tariff reduction and goods trade, but exclude services (where the UK runs a large surplus).
  • Middling Brexit – A timely triggering of Article 50 when the UK and others are fully ready and prepared – this could be early next year or after the French and German elections. The aim would be for a comprehensive and broad FTA, covering both goods and services with cooperation on regulation and product standards. There would also be broad and wide cooperation on a number of other issues from foreign policy to Justice and Home affairs. This could take some time to negotiate and may require some form of transitional period. Such a Brexit has been touched upon in our two Brexit reports and outlined in Andrew Tyrie’s recent essay published by Open Europe.
  • Soft Brexit – this would see the UK joining the European Economic Area (EEA) similar to Norway and therefore largely staying in the single market but giving up a say on the rules of the market. We’ve explained this in detail here (and why we think it’s unlikely as a long term option).
  • Very soft Brexit – not only does the UK join the EEA but it also seeks to stay inside the Customs Union. (We’ve explained here why the UK seems likely to leave the Customs Union).

Define or drop hard and soft Brexit

You may well disagree with my definitions and I encourage people to post their own in the comments (see here for an alternative scale from Roland Smith for example). However, either we stop using the terms hard or soft Brexit or we start to actually try and define what they mean. My preference would be for the former since we’re better off talking about what we are trying to achieve rather than using vague and loaded terms.

Ultimately, the type of Brexit the UK goes for is related to a whole host of issues. As we have always said the real impact of Brexit will depend on a wide range of policy choices. As such the type of Brexit pursued has to be looked through the lens of what we want and are trying to achieve as a country – what immigration policy are we going to set? What will be our regulatory approach? How will we approach trade? The answers to these questions will also determine how close or how far we should seek to be from the EU. Some scenarios require greater distance, some less. They are not inherently good or bad but will result in different outcomes. This is what we should be discussing.