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20 February 2020

Project Syndicate: The end of the EU’s Brexit bounce

After years of watching the United Kingdom muddle through a political crisis while enjoying an unprecedented level of unity among themselves, Europeans now must prepare for darker days. Negotiations over the future UK-EU relationship will inevitably divide Europeans and offer fodder to Eurosceptics.

[...]rather than averting an EU-wide crisis, the Brexit dividend may have merely deferred an inevitable reckoning. In speaking with European presidents, prime ministers, and foreign ministers at this year’s Munich Security Conference, one could detect a palpable fear that the costs of Brexit would soon start to outweigh the benefits. Many national politicians and EU-level policymakers are now worried that the dividend will become a liability.

Having reached an agreement on the transition period, British Prime Minister Boris Johnson’s government finds itself in the strange position of being able to claim that it “got Brexit done” without actually having made any of the sacrifices necessary for leaving the EU. Until December 31, 2020, British companies will continue to have full access to the EU single market, Britain will remain in the customs union, and British citizens will be able to travel freely across Europe.

So far, then, the real-world costs of Brexit have been essentially nil. [...]

With a massive 80-seat parliamentary majority, Johnson has been able to present himself as more statesman-like and dynamic than his European counterparts, many of whom are dealing with political crises of their own. [...]

Moreover, Johnson is preparing a populist economic-policy package, complete with fiscal stimulus and Trump-like handouts to favored constituencies. The hope is to engineer an economic upswing that will position the UK to outperform the eurozone, at least in the short term. If the gambit succeeds, populist parties in other EU member states will once again see Britain as a model (rather than a cautionary tale) for their own Euroskeptic causes.

Making matters worse, European leaders will now find it much more difficult to maintain the impressive level of intra-EU unity achieved by Michel Barnier, the EU’s chief Brexit negotiator, during the first phase of the talks. Once the EU begins to negotiate the details of a trade and investment deal with the UK, the divergent economic models and security needs of northern, southern, eastern, and western member states will be much harder to reconcile. Johnson’s government, embracing the role of Perfidious Albion, will not hesitate to exploit these divisions.

And yet, there can be no doubt that Brexit will hasten the UK’s decline in the medium and long term, leaving the country poorer, more insecure, and less influential than it otherwise would have been. Although the transition has been designed specifically to avoid a cliff edge or a single moment of crisis, it will inevitably be remembered as a period of missed opportunities for slowing Britain’s steady slide into middling provincialism. For now, though, this decline will be obscured by Johnson’s infectious bonhomie and public grandstanding, touting the political benefits of Brexit while ignoring the looming costs of leaving the single market.

In the next round of talks, worries French Foreign Minister Jean-Yves Le Drian, the UK and the EU will be trying to “rip each other apart.” Whereas Johnson’s political fate rests on making Brexit look like a cost-free success, the EU’s interests run in exactly the other direction. The worse Brexit looks, the easier it will be to fend off Euroskeptic challenges from within the EU.

European leaders are now weaving a new narrative to show that Britain will suffer from its decision. Even with so many other mounting crises – from trade and technology wars to climate change and the re-emergence of the Islamic State – the need to convince European voters that Brexit was a bad idea is once again rising to existential importance.

Full analysis on Project Syndicate

© Project Syndicate

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