When it comes to the single market, we could yet have our cake and eat it

When it comes to the single market, we could yet have our cake and eat it

Iain Anderson writes here in response to Douglas Carswell’s post yesterday.

I campaigned hard to remain in the EU. But my side lost. I’m a democrat, so what people voted for must prevail. To reject that is to be in denial and being in denial is not a good place for anyone right now.

So we have to make the ‘best Brexit’ we can. For me that’s about making sure we have the softest economic landing for Britain to take advantage of the opportunities and to create that Brexit bounce that we all need. We need to keep Britain as strong as possible and become even stronger.

So reading Douglas Carswell’s post yesterday spurred me into action. Douglas is always well argued and is spot on about one thing. He is right to point out that access to the single market is different to membership. Too many people are muddling access and membership and trying to blur the lines. Maybe they are just confused.

And Douglas is right to point out that membership of the single market is currently indivisibly linked to freedom of movement. Now that won’t wash anymore. But I would argue we need to think much more creatively in the months ahead.

Single market membership may be possible – and highly desirable for the UK economy – and I think it is just plain wrong to rule this out upfront. I think the UK needs to play its cards much closer to its chest.

The UK financial services industry has long played a major role in financing the global economy and must continue to do so, but the EU single market – and the EU passporting mechanism for firms – has been a major factor in its success. UK finance supports jobs and growth globally.

As the basic alternative of single market access through continued membership of the EU and European Economic Area and the passporting rights afforded within this, is third country status for the UK. While allowing the UK to opt out of regimes related to freedom of movement, becoming a third country is just not as good.

As currently enabled, third country status would place numerous limitations on UK firms or the large number of UK based foreign firms to conduct business into the EU and would not be considered sufficient for the future of UK services.

In this Brexit landscape trade deals alone will be done. For they must be done. But there are big holes in the argument which were not explored during the referendum campaign and now need to answered. And this is so important for the services sectors which remain the dominant part of our economy.

Indeed for financial services the single market remains utterly vital. Without it the UK’s initial relationship with the EU would be reliant on the General Agreement on Trade in Services (GATS) schedules and the GATS Understanding on Financial Services. CETA – that’s the EU-Canada deal – is the most comprehensive and ambitious trade deal the EU has ever negotiated. However, it falls far short of replicating the level of access to the single market the UK currently enjoys as a member of the EU, particularly in financial services. Ultimately, financial services are excluded and Canadian firms would still have to establish a presence in the EU (like US firms already do) in order to benefit from passporting.

I am not one of the doomsayers and I never was in the referendum campaign, where I ripped up the Remain script at times. I believe that the UK can still be a global financial hub by taking the lead on new markets such fin-tech. And there is the opportunity to remove many regulatory barriers.

2017 is set to be dominated by a series of elections across Europe – in the Netherlands, France and in Germany – and freedom of movement is going to be the dominant theme.

Listening to Jean Claude Juncker’s state of the Union address yesterday I found myself agreeing with Nigel Farage (for the first time ever I hasten to add) when he said “Brexit is having a very big effect here”. He is right.

So let’s think bigger. There are real opportunities to get a single market deal in the midst of all this that creates the best economic outcomes for ourselves and our European neighbours. Let’s not rule anything out right now.

While many businesses are looking to rewire their organisations to get ahead of the politicians and be able to passport into the EU single market – it is already clear that many politicians across Europe are already rewiring too. EU voters might see to that.

There might just be that opportunity to have our cake and eat it after all.