A few hours from now, at 6 p.m. EST, Britain will no longer be a member of the European Union. It’s a big victory for Prime Minister Boris Johnson, but one he won’t be able to savor for long. A major battle for the economic future of Britain and the EU is now set to begin.
It’s a battle in which the EU holds a distinctly political objective. The key here is that President Emmanuel Macron of France and the EU executive leadership are determined to show that it is better to be inside the EU club than outside of it. Macron’s fear is that Britain will now ease the burden of its regulatory and tax regimes, thus incentivizing foreign investment and expanded trade. And that this success will harm less efficient EU economies.
In turn, Macron is determined to ensure that the EU doesn’t give Britain that which it craves from any trade deal. Namely, a flexible match of access to the EU single common market and wide-ranging external trade deals with nations such as the United States. That outcome, Macron believes, would mean Britain having the EU’s cake and eating the world’s cake also. He fears a situation two or three years from now in which the British economy is surging, and the EU’s economy remains defined by debt and inefficiency.
Why the fear?
Well, because that flourishing Britain would encourage other separatist movements to call for their own EU-exits.
In that sense, an independent Britain is a political threat to the EU’s very existence. Remember, for those who sit at the center of EU political and legal power, the EU is not simply a political bloc designed to foster national interests in shared cooperation. It is a project to transition the EU’s 27 remaining members toward the eventual formation of a United States of Europe.
Britain does enjoy one advantage in these negotiations. It’s a net importer of EU goods and services, responsible for buying hundreds of billions of dollars from EU companies each year. Britain is thus banking on the EU blinking, for fear of member states complaining about lost jobs in the face of declining British consumption. Still, it will be a hard sell.
Brexit is done, but the battle for economic influence is just beginning.
[Also read: ‘A future outside the EU’: Will Brexit make Britain great again?]
