Blog Post

Concessions offered Britain are key in Brexit debate

The concessions granted to the United Kingdom will encourage eurosceptic forces to demand special institutional solutions for other countries.

By: Date: June 2, 2016 Topic: European Macroeconomics & Governance

This text was published in the Spring 2016 issue of The International Economy.

The debate on Brexit focuses on the consequences for the United Kingdom, but largely ignores the impact of the new EU-UK agreement on the European Union. If the “remain” camp succeeds on June 23, 2016, this agreement will be activated with serious consequences for the prospects of the European project.

The most important concession concerns suspension of the reference to “…ever closer union among the peoples of Europe” in the Treaty’s Preamble with respect to the United Kingdom and acceptance that this country “…is not committed to further political integration into the European Union.” Given that each new area of integration within the European Union may involve a transfer of a certain degree of national sovereignty to the EU governing bodies, this means that no substantial treaty changes (of the sort similar to the Maastricht, Amsterdam, Nice, or Lisbon treaties) will be possible in the future (treaty change requires unanimity of all member states).

The risk of stopping new integration initiatives comes exactly at the time when the European Union needs more internal coherence, power, and ability to respond to numerous challenges such as security crises in the neighborhood, inflow of refugees, and terrorism. The only two ways to move forward will be either via the mechanism of enhanced cooperation (within the EU Treaty) or separate inter-governmental treaties outside the EU Treaty. Both will lead to “integration à la carte” and further complication of the EU decision making process, providing euroskeptics with new anti-integration arguments. Eventually it may lead to the weakening and even partial disintegration of EU governing bodies, as various narrower integration circles will require their own management and coordination mechanisms.

Another part of the draft EU-UK accord will negatively affect the integrity of the European single market by offering exemptions in financial integration and the free movement of people. The first applies to all non-members of the banking union, and can lead to even deeper fragmentation of the single market for banking and financial services.

Changes in the free movement of people can be applied by all member states once they come into force. Although none of them—such as indexation of exported family benefits to the local living costs of the residence country, and limiting in work benefits to newly arrived workers for up to four years—represents revolutionary change, if taken together, they signal a tendency to restrict the free movement of people within the European Union.

Overall, the concessions accepted by other EU member states to avoid Brexit will not appease eurosceptic politicians in the United Kingdom or in other countries. Even if the “remain” option wins the referendum, eurosceptic sentiments will remain strong. Among other factors, euroscepticism will be fueled by the United Kingdom’s increasing detachment from the mainstream European integration process and EU politics. Elsewhere in Europe, the concessions granted to the United Kingdom will encourage eurosceptic forces to demand special institutional solutions for other countries.


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