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October 20, 2016

No games please, we are Europeans

Europe's leaders, most recently Donald Tusk, have made it absolutely clear that there is not going to be any trade-off between immigration control and single market access. Angela Merkel and François Hollande have said the same. And yet, that message does not seem to be understood in the UK. We noted a couple of comments in the FT that surprised us in this respect. Gavin Jackson has a fun piece in which he demonstrates his knowledge of co-operative game theory. But, as so often with advanced mathematical techniques, their applications to real-world problems is often a bit of a stretch. In this case, there is not even a game. Whatever the math of possible QMV coalitions, the simple fact is that the EU is not playing. They say that immigration controls necessitates a hard Brexit. There is nobody who disagrees. What else do you need to know? 

Gideon Rachman says it should be possible to compromise and achieve a trade-off between single market access and an emergency break on immigration. We do not believe that this is possible. By agreeing an emergency break on immigration, the EU would sacrifice the free movement of Labour, allowing countries to declare a permanent state of emergency. And, if there are emergency brakes on immigration, what will stop others demanding an emergency break on trade? We also don't think that Theresa May could scale back her immigration control pledge to an emergency break. The simple fact is that, by insisting on immigration controls, the UK has set itself up for a hard Brexit.

We agree, mostly, with the analysis by John Springford who tried to dispel two myths that are prevalent in the UK debate. The first is that you can opt into the areas of the single market you like. He is right. You can either be a member of the EU or the EEA, and by extension a member of the single market; or not. There really is no grey zone. We are less sure about his second argument that the UK cannot make up the likely loss of EU trade with non-EU trade. Our view is that this statement is trivially true on the assumption of static flows. But the UK economy is very likely to adjust after the Brexit shock - just as it adjusted to the single market in the late 1980s and beyond. Brexit will give rise to different specialisations, and there is no reason to believe that should be an unsustainable position. We agree, however, with his overall conclusion that the choices are stark. Either you are a member of the single market (which would imply no immigration controls of any kind), or you are not a member. The stark choice even applies to the transitional deal. The minute the UK starts immigration controls, it will no longer be part of the single market.

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