Why negotiating anything other than a disastrously hard Brexit will be so tough

Charles Grant of the Centre for European Reform has written an excellent analysis of why the remaining EU members are taking such a hard line over the term’s of Britain’s departure:

On recent visits to Berlin, Brussels, Paris and other EU capitals, I have been struck by the largely united approach of the 27 to the Brexit negotiations. They assert that if Britain restricts free movement after it has left the EU, it cannot be part of the single market. Instead, they suggest, it should negotiate a free trade agreement with the EU, along the lines of that between the EU and Canada. This could be very damaging to Britain’s services industries, including those in the City of London, since FTAs do not normally cover many services.

Boris Johnson, Britain’s cavalier foreign secretary, recently said that suggestions of a link between single market access and freedom of movement were “complete baloney…the two things have nothing to do with each other.” Britain’s partners think he is talking baloney. Wolfgang Schäuble, Germany’s finance minister, offered to give Johnson lessons on how the EU works and to send him a copy of the treaties.

British eurosceptics are onto something when they point to the EU’s inconsistent commitment to the ‘four freedoms’ of goods, services, capital and people. The liberalisation of services has been only partial, partly because of Germany’s reluctance to open up its own service industries and restricted professions.

But that will not help the British, because the indivisibility of the four freedoms is a mantra that European leaders believe in. British negotiators need to understand why the 27 are taking such a tough line on the four freedoms. Their obduracy is based on more than the attachment of EU politicians and officials to conservative, traditional thinking. There is a real worry that if the British achieve some special status, with their own institutional arrangements, other countries – inside or outside the EU – might ask for equivalent deals. And that could undermine existing institutional structures, to which the Commission and the European Parliament are especially attached, and possibly even lead to an unravelling of the EU.

The biggest reason why most governments take a tough line on the four freedoms is their fear of populism. Thus in Paris, mainstream politicians do not want Marine Le Pen to be able to say: “Look at the Brits, they are doing fine outside the EU, let’s follow them there”. Similar views colour thinking in The Hague, Rome and many other capitals. So the British must be seen to pay a price for leaving. They cannot be allowed to enjoy the benefits of membership, like participation in the single market, without accepting the responsibilities, like paying into the EU budget and accepting free movement (which both Switzerland and Norway do).

I found a strong consensus for this hard line in EU capitals. Many governments adopt a softer tone than the French, the Commission and the Parliament, but they differ little on substance. The British government needs to take MEPs very seriously. They must approve both the Article 50 agreement and the FTA governing future relations between the UK and the EU. If by some feat of brilliant diplomacy, Britain were to negotiate single market membership combined with limits on free movement, MEPs would certainly throw out the deal.