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Leaning toward ‘Soft Brexit’?

by John Brian Shannon

Now that Brexit is beginning to sink-in for Britons and for UK politicians entrusted to carry out the will of ‘The People’ it seems that a so-called ‘Hard Brexit’ might be orders of magnitude more difficult than first imagined, while a so-called ‘Soft Brexit’ might be preferable to all parties, which appears to be an elegant solution at the point where the people’s interests intersect with the UK economy.

Because Philip Hammond’s economy is doing well considering everything that’s happened since 2008, PM Theresa May can relax about the economy and get on with her part of running the United Kingdom — namely, the political arrangements for a Soft Brexit now (let’s call that Brexit Stage I) and possibly a Hard Brexit later (let’s call that Brexit Stage II) if that part is approved by voters in the next UK election on May 7, 2020.

Soft Brexit vs. Hard Brexit. Image courtesy of J.P. Morgan Asset Management.

Soft Brexit vs. Hard Brexit. Image courtesy of J.P. Morgan Asset Management.

Soft Brexit probably equals mild uncertainty in the markets, while Hard Brexit might cause economic chaos

Since 1973 when Britain joined the European Community and it’s various and later governmental structures, the policies in all member nations have largely been set by common agreements forged with those organizations. There are literally hundreds of thousands of laws and regulations to replace in a post-Brexit UK. It will be a humongous task.

Even Greenland, with its total population of 56,196 took three years to exit the European Union. The UK with it’s $2.8 trillion (GDP) advanced economy has hundreds of thousands of EU laws, trade laws, tariff controls, manufacturing standards and immigration rules, that guide industry, the UK government, and Britons — all of which might take 5-10 years to replace with UK-centric legislation. Industry simply can’t function without proper regulations which leaves only one choice for many organizations; Leave Britain. That’s not in the best interests of Britons, the government, nor of UK industry itself.

A brilliant plan, is one that allows the UK to rejoin the EEA and the EFTA (as in the Norway or Swiss model) and it’s actually doable.

Have you seen Norwegian or Swiss economies? Let’s just say that on a per capita basis, they beat every European economy every year.

And, sure, some commenters will try to make things more complicated than they really are. But it isn’t complicated unless you desire it to be that.

With proper stewardship the UK economy can perform as well as any non-EU-member-nation noted in the links below. Check out their world-leading per capita income and low unemployment rates!

Norway Economic Outlook
Switzerland Economic Outlook

If Switzerland and Norway (for two examples) can have EEA and/or EFTA membership, and bilateral agreements with the EU, and booming economies — there’s no reason the UK can’t.

It’s not rocket science. Brexit does NOT mean the end of trade with the EU. That would cause long-term recession in the EU (likely leading to its dissolution) and a long-term case of the economic doldrums for the UK. The two blocs need each other whether some like it or not. So, get on with it!

UK Prime Minister Theresa May needs to stop everything(!) and get warm approval for EFTA membership accession from all four EFTA member nations.

Not to mention appointing a Minister for Scotland (a ‘Scot’) a Minister for Northern Ireland (a ‘Northern Irelander’) and a Minister for Wales (a Welsh resident) to shore-up relationships with the UK’s devolved regions, and also appoint a Minister for England.

And gain approval for Brexit among the remaining 27 EU member nations which must unanimously approve Britain’s exit from the European Union.

Accomplishing all of that would be five-years’ worth of dedicated work for any British Prime Minister! Even former Prime Minister extraordinaire Sir Winston Churchill, might’ve found a challenge in that.

UK Conservatives (with significant help from UKIP) have gained a mandate for Soft Brexit but I don’t think 52% is enough of a mandate for Hard Brexit. Which is why I support ‘Soft Brexit’ for now — and if approved by voters at the next election — ‘Hard Brexit’.

In the meantime, there’s an unimaginable amount of work left to secure a stable, fair, and expeditious Soft Brexit that solves some of the deficiencies of Britain’s EU membership, while leaving only free movement of labour and persons, and certain trade matters to negotiate, if it ever comes to Stage II Brexit.

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