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Even political nerds will be glad when the Brexit debate dies down…. in about five years. Far from calming down the debate has been renewed by the election debacle and the question of how we leave has remerged. Now all the talk is of a “soft Brexit” being put back on the table. Hard Brexit, soft Brexit, clean Brexit, a la carte Brexit, crème brûlée Brexit, al dente Brexit, when will it end? Do we go soft or hard? Should we stay in the Single Market? Should we stay in the Customs Union? What about joining the EEA? Questions, questions, questions. Dear Reaction reader, allow me to explain.
What is a “hard Brexit?”
The “hard Brexit” scenario has, I believe, changed meaning over time and can be hard to pin down as different people have their own definitions. It used to mean leaving with no deal at all. The meaning has seemingly now settled on a situation in which we leave the Single Market and the Customs Union, thereby seceding from the entire EU apparatus and replacing them with new, bespoke arrangements e.g. A comprehensive Free Trade Agreement.
The economic risks of this scenario are higher, particularly in the short term, but it is certainly the most unequivocal reversal of economic integration and the end of political union; hence why its supporters call it a “clean Brexit”. It means, among other things, a fully independent immigration policy, no contribution to the EU budget and greater freedom to diverge from EU regulation.
What does a “no deal” scenario mean?
This refers to a situation in which we leave the negotiating table with no agreement at all and revert to the default rules of the World Trade Organisation. It is often said that the EU trades under these terms with many countries, such as China and the USA; this is false. There are a wide range of Treaties, both bilateral and multilateral, that govern trade between the EU and China and the EU and the USA. The EU does not in-fact trade with any major economy in the world under WTO rules alone…