Brexit – No Deal Is Not an Option

As the end of 2018 approaches, the UK and the European Union still need to negotiate the details of Brexit. However, any kind of agreement still seems a long way off. It is of the utmost urgency that some of these details be clarified – EU citizens living in the UK, British citizens living in Europe as well as busineses on both sides of the Channel have been waiting long enough.

A number of studies have pointed to the potential economic risk of more strictly regulated trade between Britain and the EU. According to various studies looking at a number of scenarios ranging from a hard to a soft Brexit, Britain is likely to face economic losses amounting to somewhere between a 0.6 and 7.5 per cent reduction in GDP by 2030. Germany’s GDP is expected to decrease by only 0.1 to 0.3 per cent. This relatively small drop is unsurprising given that, despite Britain being Germany’s fifth biggest trading partner, only around 6.6 per cent of German exports actually went to the UK in 2017. What these studies do not take into account is the possible upheaval in Northern Ireland or the fates of many EU and British citizens.

In terms of the negotiations, the EU-27 seem to have done everything right. The negotiations were delegated to the European Commission, who appointed Michel Barnier as the EU’s chief negotiator with a clear mission going into the talks. The EU prioritised various aspects of the negotiations – first the withdrawal agreement and then negotiations over future cooperation – according to the principle that in negotiations you should always deal with the issues you see as most important first and then address the issues that are important to your negotiating partner after. This means that the negotiating partner is generally more willing to agree to a deal in the first part of negotiations.

Finally, the EU pursued the negotiating strategy of “burning bridges” with the refrain: “The four freedoms of the EU – free movement of persons, goods, services and capital – are not negotiable”. The phrase “burning bridges” can be traced back to Hernán Cortés, who, after arriving in Mexico in 1519, burned his own ships to make it clear to his men and to the Aztecs that there was no going back. The same applies to the four freedoms – it’s all or nothing,

It is often said that negotiations involve creating a cake that is then divided between the negotiating parties. The negotiating strategies of delegation, agenda setting and burning bridges are often used to sway the results of the negotiations in your favour, that is, to get a larger slice of the cake. However, they generally do not help when it comes to actually reaching an agreement. On the contrary, the excessive use of such tactics makes it more likely that negotiations will collapse without any agreement being reached. This is the risk facing the Brexit negotiations as they currently stand.

One might have expected, given the severe economic repercussions of a “no deal”, that the British would try to avoid this option at all costs. However, thanks to pressure from hard-line Brexiteers a “no deal” is a real possibility.

If the negotiations were to collapse without any agreement made, this would further drive a wedge between the UK and the EU. The EU-27 would be well advised not to let things go that far. What the EU needs to do is adjust its negotiating strategy. While the four freedoms are part of all EU treaties, they are not compulsory for international treaties. They are also not an economic necessity. The extent to which the Member States can delegate responsibility for the negotiations also has its limits. It is ultimately the leaders of the EU-27 countries that are responsible for the EU’s negotiating strategy and the end result of the negotiations and they will be judged based on that result.

A longer version of this article appeared on 24 September in the “Süddeutsche Zeitung”.