”European integration is often said to be driven by crises. Brexit made the Member States realise the importance of EU cooperation and the single market”, says Pehr-Johan Norbäck, Associate Professor and Senior Research Fellow at IFN.
Why did the UK leave the EU and how did it impact the union? In his book ‘Europaperspektiv 2024: The Depth and Size of the EU in a Time of War’ – recently released in English – Pehr-Johan Norbäck, Associate Professor and Senior Research Fellow at IFN, dedicates one of the chapters to exploring the factors behind the Brexit decision. He notes particularly that the UK has a different relationship with the EU to that of other European countries.
”It stems in part from their unique history. They have a strong parliamentary tradition, once ruled a vast empire, are an island nation and have not been defeated in modern times. This provided them with a confidence that other major countries on the continent lacked.”
He traces this difference in attitude back to the European Coal and Steel Community, which was founded in the early 1950s by France, Germany, Italy and the Benelux countries. The purpose of creating this union was to bind France and Germany together in order to make future wars in Europe impossible. By the late 1950s, this cooperation had developed into the European Economic Community (EEC), later evolving into the EU.
”It was countries that either occupied others, or had been occupied themselves, which formed this community. They had a strong interest in change. The British were positive, but didn’t want to join a supranational integration project themselves.”
Ultimately, however, the UK eventually changed its mind and – reluctantly – became a member of the EEC in 1973.
”Britain wanted to revive its stagnant economy and regain its global influence, so it applied for membership of the EEC.”
”They were once a world power, but now nobody cared about them. Now, as members of this club, they may still have an impact. However, the decision to pursue membership was more of a cost-benefit calculation; it wasn’t driven by any genuine British passion for European integration.”
Much of the difficulty lay in the level of supranational governance within the EEC, something that Britain found hard to accept. Yet although the UK struggled to adapt to this, it contributed significantly to the EU cooperation, he says.
”For instance, it was largely thanks to former British Prime Minister Margaret Thatcher that today we now have the single market.”
When the Conservative Margaret Thatcher took over as Prime Minister in the late 1970s, she realised that if the UK wanted to see greater benefit from its membership of the union, it needed to leverage its large financial sector. The EEC had previously removed tariffs and quotas in order to create a free trade area within Europe, he explains.
”So, there were no formal tariffs or quotas affecting trade between Member States. Instead, there were increasingly what we call non-tariff barriers – rules and standards that differ between countries and complicate trade. Thatcher pushed to remove such non-tariff barriers and eventually this led to the single market.”
Unlike today, each Member State was able to exercise its veto in the Council of Ministers, meaning any single country could maintain those barriers that benefited them. The only way to remove them was to implement a majority vote in the Council.
”It’s ironic that Margaret Thatcher, who later became an icon for Brexiteers, actually helped reduce British sovereignty in this way. Previously, the UK was able to use its veto in the Council to block any actions the other countries or the Commission wanted to take.”
Although the UK had long had a complex relationship with the EU, the 2016 referendum on EU membership came as a shock to most. Suddenly, Brexit had become a reality, and - following long negotiations - in early 2020 the UK became the only country to have left the EU.
”It was like an earthquake, and I don’t think anyone was really prepared for the UK to vote to leave the EU.”
”But in hindsight, the various factors that led to Brexit are clear.”
These included the 2008 financial crisis, which hit the UK particularly hard, and public frustration over increased migration following the EU’s eastern enlargement, which allowed more people to take advantage of free movement.
”While globalisation and technological progress have created greater prosperity, it’s also important to remember that not everyone has benefited. Even if aggregate wealth increased, that doesn’t mean everyone won, and largely those who voted to leave were those with lower education, less wealth, were older and lived outside of the big cities such as London.”
Once the shock of the Brexit referendum result had settled, there was speculation over whether more Member States would follow.
”But no other country has since left. One reason for this is the chaos created by leaving and the difficulty of the negotiations.”
He believes that the EU side was the more-experienced in negotiator, while the UK - as an EU member - had not developed the required expertise.
”In terms of trade agreements, the EU has this expertise in depth. An individual Member State doesn’t have the people who are experienced and knowledgeable enough to negotiate such agreements. The UK hadn’t negotiated anything on that scale for many years.”
”This is also an experience the EU brings with it, where Member States – big and small – were able to remain united during the negotiations. This also provided the EU with the confidence it continues to retain today.”
The negotiations ultimately resulted in a trade deal with the EU for the UK. However, unlike countries such as Norway and Liechtenstein, which have free access to the single market through their membership of the European Economic Area (EEA), the UK only enjoys tariff-free and quota-free access.
”This makes it more cumbersome to sell goods and services to the single market from the UK than it does from Norway, in part due to a lot of administrative demands.”
”For example, if you want to export something from the UK to the EU, you have to prove that your product does not overly rely on inputs from a third country. It’s also now difficult and costly for British musicians and bands to tour in EU countries.”
However, a ‘Norwegian’ solution would require the UK to accept all EU legislation without influencing it. For a major economy like the UK, such an arrangement would be unthinkable, argues Norbäck.
”It means that you although you gain access to the single market, in return you have to implement everything that the EU decides. Yet you have no say on the decisions because you’re not a member.”
In many ways, the UK has been negatively impacted by Brexit. Indeed, over the past two years, public opinion on Brexit has shifted significantly. According to a YouGov survey, a majority now regret the decision to leave the EU. Several studies also show that the British economy has developed less favourably than it would have done had the UK remained in the EU. At the same time, believes Norbäck, the EU has become stronger post-Brexit.
”European integration is often said to be driven by crises. Brexit made the Member States realise the importance of EU cooperation and the single market.”
”The EU has gained confidence in handling crises as a result. Indeed, perhaps the most important lesson from Brexit is that the union can become stronger by staying together. This has been shown both in the handling of the COVID-19 pandemic and the war in Ukraine; time will tell if this unity can be maintained. Low growth, declining competitiveness, climate transition, security and - not least - the outcome of the American Presidential election are just a few examples of issues the EU must now address.”