Denis MacShane was Minister for European Affairs under Tony Blair’s Labour government. Author of several books, he regularly appears in the media to comment on current events, particularly in his country. Born in Scotland, he has also just received an Irish passport, thanks to his grandmother’s origins, in order to maintain his links with the EU. (Interview by Solenn Paulic)
Agence Europe - the UK could lose at least 4 points of GDP in 15 years with its exit from the EU, according to experts. Is the country really the big loser in these negotiations?
Denis MacShane - Let’s be very clear, this agreement has losers on both sides. Brexit is not good for the UK or the EU, which has lost a limb. But it is a very partial agreement, covering only 20% of the UK’s manufacturing and agricultural economy. No services, for example, from the digital economy are included at this stage. We find ourselves with a deal that concerns the economy of the 19th century!
And in those areas covered, the EU has a trade surplus with the UK of €100 billion, and that’s going to continue, as the UK doesn’t have much to sell to the EU, after all. Most economists and official government statistics see a decline of 4 to 8 percent of GDP, as the country also has to face the Covid-19 pandemic, which creates a ‘Brovid’ situation. On Brexit, there are many reports about the mountains of paperwork for companies. We also know that €6 billion of trade shares have been relocated to the EU from the City.
Audiovisual products made in London can no longer be exported to the EU as before, and there is also VAT to be paid on what is exported. For services, agreements can be negotiated with the EU, but an authorisation from the member country and compliance with its rules will be required.
It is the accumulation of all these things that leads to this estimate of GDP loss.
Boris Johnson promised the success of Global Britain. Can’t the British economy compensate for its losses by trading with other partners?
Today, I don’t see what other source of economic gain could exist, but that remains to be seen. The country will have around 60 international agreements, but most will be a copy-paste of agreements the EU has already negotiated and do not open up new market access for the UK economy.
As for working and studying more easily in the United States and Australia... these countries also have very strict rules for working there. Nor will the UK be able to deregulate everything, because the price would be the agreement with the EU. Abolish the minimum wage and worker protections, abolish paid holidays? They won’t, because that would blow up the agreement with the EU.
We are therefore in a very theoretical recovery of sovereignty. The British Conservatives wanted to reproduce the era of Margaret Thatcher, who managed to boost the economy in some ways. They believe that Brexit will boost the British economy in the same way. We’ll see.
I don't think the UK will be the sick man of Europe, but it could be the one that always gets a little flu.
Can we already predict the nature of future relations between London and the EU?
It’s a pointless debate, because in reality nobody knows, but I think we will have something similar to the relationship with Switzerland.
In September 2020, the populist SVP was defeated in a referendum on freedom of movement. But defeat did not solve the problem in relations between Switzerland and the EU, because the Swiss do not want to take orders from any external power, including the Court of Justice of the European Union.
Soon the UK, like Switzerland, will have to open negotiations covering the remaining 80 percent of the economy represented by the City, international lawyers, consultants, e-commerce, universities, and all creative artists. These negotiations will continue for years to come, as happened between Bern and Brussels.
And it is to be expected that all the Brexit obsessed people will jump at every opportunity to say that these new discussions are an open door for the EU. Boris Johnson and Keir Starmer (who heads Labour) should take a look at Switzerland, because Brexit, far from having taken place, is only just beginning.
Is the EU emerging from Brexit stronger in the long term?
Brexit has served to unify the EU a little more and to reduce anti-EU unrest. I am not saying that anti-EU populism has disappeared, but the relative failure of Brexit has made Europeans understand that it is better to work together than to return to a Europe of nations.
Even Marine Le Pen has given up her insistence on leaving the euro. And voters saw for themselves what a mess Brexit has created in the UK.
But, of course, this does not erase the divisions between Member States. Recovery work will be problematic, and the European leadership, alongside the British leadership, is not impressive either. And what will happen after Angela Merkel’s departure? Europe is not doing as well as it thinks.