The Brexit process has been chaotic and confusing. It has also made one thing perfectly clear: the UK will always be tightly tied to Europe. The depth of economic ties, historical associations and social bonds are simply too close, longstanding and important for a definitive break-up.
Despite this, the Conservative government has not found a route to a new relationship with Europe that satisfies the UK’s myriad stakeholders. That is why Europe’s leaders should now take a bold step, proposing an entirely new deal for the UK but remaining inside the EU, and in so doing breathe new life into the European project.
The UK’s problem is political. As we have seen, no majority exists in Parliament for any option on the table. The other 27 member states of the EU have said they will not renegotiate the withdrawal agreement, despite Brexiters’ hopes for a better offer. A second referendum on the same question is also not a solution to the underlying problem. A vote that flips from 52-48 per cent in favour of Leave to perhaps 52-48 per cent in favour of Remain fails to resolve the fundamental issues.
While the problem is politics, the damage will be felt in the economy. Almost half of British exports go to the EU. Despite strong evidence that its economy would be better off staying in the bloc, the UK elected to Leave. This can be explained in part by recognising a longstanding economic paradox — that UK businesses want to do business with continental Europe but do not like many EU rules. In my time at Barclays, and now as an owner of broker Panmure Gordon, I have heard this same story time and time again when visiting small businesses across the UK.
The reality is that, since joining, the UK has been an economic cornerstone of the EU. I vividly recall, for example, being part of the London team at Morgan Stanley in the early 1990s that led the underwriting of the inaugural European currency bond, which was then issued by the Bank of England. Innovations such as this opened the capital markets for financing government and later business operations, which increased economic growth and employment. The UK has been more central to the European financial system, and for longer, than many realise.
Leaders of the EU27 have followed their negotiating principles since the Brexit vote, noting that most countries would prefer to keep an EU of 28 member states together. This is understandable as they want to maintain the integrity of the bloc and discourage other members from electing to leave. While the UK is stuck with no path forward, the EU27 still have options.
Could these European leaders present the UK with a bold new plan that would give those on both sides what they want, and address tensions on the continent regarding the EU’s long-term future, but on the condition that the UK gives up Leave for Remain?
As a start to such a plan, there is important common ground. Europe wants to maintain a single market for goods, services and people. The UK wants to keep as much access to the single market as possible, while addressing its citizens’ concerns on important issues around integration. A proposal from Europe that deepened economic ties but returned some powers to London could enable the UK to renew its commitment to the EU on new terms.
Here is the reality. Right now, the UK leaves with no deal or votes again to Remain. UK citizens want a change in terms. The EU27 want to preserve the union. Is the answer a new deal for the UK that sacrifices the desire to Leave in favour of a revised deal for Britain that preserves the most successful multilateral economic union that the world has ever known?
As a dual US/UK citizen who had the opportunity to live in London and work throughout Europe, I see the Brexit issue more through the lens of business, job creation and the UK’s and Europe’s competitiveness at home and abroad. There is a lot to play for in a deal that has a profound impact on sustainable business growth and employment in the UK and across Europe. Fifty-three per cent of all UK imports came from the EU in 2017, a total of £341bn. And 44 per cent of all UK exports went to other countries in the bloc.
Britain is in a political emergency. An unnecessary and serious economic crisis in an uncertain macroeconomic environment is now on the cards. A real alternative to the current situation is urgently needed. The UK cannot create that new reality alone. The EU27 have a unique opportunity to take a next step forward and initiate a proposal that can break this gridlock and lead to a new alliance between the UK and Europe.
The writer is founder and chief executive of Atlas Merchant Capital. He was previously chief executive of Barclays
Get alerts on Brexit when a new story is published