After the Prime Minister has called for a “new relationship with the EU” for the UK, the Foreign Secretary has pointed out that the UK public is becoming extremely unhappy with the many powers sucked out of the UK into the EU.
The new policy some in government and some leaders of business seem to want is a new deal based on full membership of the single market, and no membership of the Euro, banking union, fiscal union and the rest. We need to ask is this feasible? Could this work? Is this something we are likely to be able to negotiate?
This attitude rests on the assumption that the single market is a clearly defined set of policies which offer us good access to other EU markets. It implies that the single market is broadly a free trading or market opening device. This is not, of course, how some on the continent see it. They see it as a system for governing unruly markets, a manifestation of increasingly strong centralised government from Brussels. The single market to them has to have a social dimension, it requires policies for social cohesion, regional fairness, environmental intervention and the rest.
This means that trying to seperate those policies which are central to the single market from the rest which are necessary for a strong federal government appropriate to a single currency is difficult and itself the stuff of disagreement. The UK may think that labour laws, trans European networks, skills and training, public health and the rest are not part of the single market, but others think they might be. Is health and safety a matter for national determination, or is it essential to be settled at EU level? Does a single market need universal rules on benefits and income top ups? Do we have to pay benefits to people who come under the free movement provisions to the UK and who then do not find work or lose their job? Does a single market imply open borders for the free movement of people? Is carbon pricing a market measure, or a major impediment to the competitiveness of Uk companies?
The immediate negotiation is about banking. Here the wish is to say all the rules agreed so far – and there are many – are single market matters. Any new rules agreed in the name of a banking union are a step too far. How then, if others accept this distinction, does the UK prevent the Euro group using its muscle to impose Euro style regulations through the single market mechanisms? How can the single market section share a regulator, the European Banking Agency, with the Euro area? How, even with a split voting system, can the UK be sure it will not in future be dictated to on banking matters by the Euro group, who may have the support of other non Euro states wishing to join the Euro?
It may be the case that we need less than the so called single market to be able to trade with other EU members. What we wish to avoid is having to accept regulations and standards on products we wish to export to non EU destinations, as these can be an impediment to our trade. The rest of the EU will be reluctant to let the UK out of regulations we see as a needless cost and they see as a necessary part of a socially and environmentally acceptable controlled market. The UK wants free trade, not single government.