There are still trade options open for Britain

This year’s referendum was the most divisive, polarising event in Britain’s postwar history – which is why you would have thought the government would wish to respect the result delivered by one half of the country but secure the trade that the other half believes is so important.

Instead, the United Kingdom government has prioritised politics over economics and we can hardly complain if the European Union’s remaining 27 member states do the same.

The economic choice we are making is stark. We can go one way or the other. Continuing in the single market, we would want input to the EU’s future rule-making; continued access to Europe’s financial services passporting regime; and a single EU/UK regulatory rulebook to permit maximum ease of trade.

The alternative is life completely outside of the EU, jostling with others for market access at the trading bloc’s external tariff border with no special access or privileges. The latter is what people mean by hard Brexit.

We can try for an enhanced status which would soften the hard landing. This means trying to negotiate a bilateral treaty with Brussels that gives tariff-free access to our export goods and market access for services on the basis of equivalence or compatibility of our national licensing regime with those of the EU 27.

But we should have no illusion about this. UK businesses will be in a weaker position. If Britain is out of the single market, the EU 27 national governments will have more discretion to discriminate against us in their markets and we will not have access to the European court system to arbitrate and enforce the rules. Our services will not be playing on an even playing field anymore in Europe.

It would also be more difficult to treat the EU as one vast factory floor across which goods, parts and components in lengthy value chains can be moved back and forth across borders without customs barriers getting in the way. This is what Nissan, Toyota, Ford, Airbus and Siemens, along with many others do at present. It is a big reason why they invested in UK plants in the first place.

Over time, big businesses will be able to adjust. Many will move to the continent leaving their workforces behind. It is the small- and medium-sized companies – those with narrower profit margins – who will be hit harder or put out of business altogether.

Staying in the single market raises many policy issues, chief among them being movement of people. This needs to be controlled not suppressed. Our economy needs mobility of labour from the EU just as many UK citizens want to work, study or retire in Europe.

Could we find a post-Brexit trade deal with the EU 27 that gives a balance of advantages to both sides? I am confident we could. But it would require a clear prior commitment by us to staying in Europe and creating the most constructive, positive relationship with the EU. This is lacking and accounts for the current poor prospects for the coming negotiation.


Peter Mandelson is former EU commissioner for trade