Exit from single market closes a chapter UK did so much to write

Exit from single market closes a chapter UK did so much to write


When Big Ben strikes 11pm on New Year’s Eve, the UK will leave Europe’s single market. It will be a moment of national catharsis — and like in Greek tragedies — a moment when the protagonist’s own triumphs of the past catch up with him.

For the roots of Britain’s rupture with Europe grow from its greatest European victory: the success in imparting to Europe a British and especially Tory economic ideology of eliminating bureaucratic barriers to trade. The single market was to a large extent created by British Conservatives.

“Just think for a moment what a prospect that is,” Margaret Thatcher told an audience of British business leaders at Lancaster House in 1988 when she was prime minister. “A single market without barriers — visible or invisible — giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people. Bigger than Japan. Bigger than the United States. On your doorstep. And with the Channel Tunnel to give you direct access to it.”

Thatcher was the political force behind a genuinely unified European market for goods, services, labour and capital; Arthur Cockfield, the Brussels commissioner she appointed in 1985, was its intellectual architect and bureaucratic engineer.

How UK newspapers reported Britain’s entry into the common market in 1973 © Frank Barratt/Hulton/Getty Images

The motivation was plain enough. When Britain belatedly joined what was then known as the European Economic Community in 1973, economic integration mainly took the form of a customs union, known as the bloc’s “common market” in which tariffs between members were eliminated. Those who saw economic benefits for Britain were vindicated, with membership quickly bringing to an end Britain’s long underperformance as economic growth caught up with European peers.

The common market remained, however, riddled with barriers as differing national regulations made cross-border trade costly.

And as soon as he arrived in Brussels in 1985, Cockfield set out to remove them. His white paper on “Completing the internal market”, one of the most consequential documents in EU history, set out a compromise between “harmonised” pan-European rules and “mutual recognition” of national ones. Much as the British might once have wanted a simple system of mutual recognition, Cockfield realised that politically, this would never fly without a foundation of minimum common standards. Where necessary, therefore, common rules relating to the single market would be adopted — by qualified majority of member states rather than unanimous consent, to avoid political deadlock — with national leeway to shape the detailed implementation where possible.

Cockfield was remarkably successful. The 1986 Single European Act allowed single market legislation by qualified majority. Hundreds of legislative measures were then passed at speed, and by the start of 1993 the single market was a reality, and most border controls disappeared. 

The UK began to sour on its own creation, however, even before it came into being.

An anti-euro protester campaigns against the UK adopting the currency in 2003 © Scott Barbour/Getty Images

One irritant was present from the start. For continental leaders, the elimination of capital controls meant only monetary unification could prevent currency instability that would distort trade or jeopardise cross-border investments. As the slogan had it: “One market, one money”. This link was never accepted in Britain. In the long-term this deepened a divergence of interests between the UK and the euro members, which would show up starkly after the global financial crisis and David Cameron’s ill-fated attempt to negotiate new terms for Britain’s EU membership.

But other consequences of the single market were ones the UK had not just accepted, but desired. Yet it soon had second thoughts about them.

Shortly after Lancaster House, Thatcher gave what would become known as the Bruges speech, a foundational text for British Eurosceptics. The European Commission’s ambition for a “social Europe” had woken her up to the danger, as she saw it, that she had “successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level with a European superstate exercising a new dominance from Brussels”.

If that had come to pass it would have been an effect of the very method Thatcher and Cockfield had championed: common rulemaking by (qualified) majority decision. The prime minister who pushed for common rules to remove trade barriers struggled to accept that a majority of others may have different ideas about what the best common rules for free trade ought to be. In parallel, the Labour party warmed to a European integration it had previously spurned. 

Boris Johnson had long supported the single market but was concerned about the role of the European Court of Justice © Carl Court/Getty Images

A further implication of the single market project was the growing role of the European Court of Justice. Where there are common rules, there must logically be a common arbiter of whether the rules have been obeyed. But this increasingly rankled the most vocal British Eurosceptics as offensive to sovereignty. Even for prime minister Boris Johnson, long a supporter of the single market, the ECJ’s final word in interpreting much of the law that regulated the UK economy seems to have been genuinely intolerable.

Then there is the most toxic part of the 2016 referendum campaign. Part of a betrayal myth about the UK’s 1973 accession is that people signed up only to free trade, not to a freedom of movement later imposed by stealth. But the ability to work anywhere in the bloc was part of the EU’s founding credo, as was well understood in the original UK membership debates.

The single market nevertheless made the aspiration of free movement for workers a reality by sweeping away bureaucratic and legal barriers to moving. Then in 2004 countries from eastern Europe joined the EU, championed by the UK, which was also one of few countries to waive a transition period before east Europeans gained full free movement rights. Millions of workers took the opportunity to come. The transformation of Britain’s labour market and demography gave Eurosceptics their most potent issue to campaign on.

It was, in all these ways, a case of willing the end but not the means. British Conservatives managed to liberalise trade across Europe, then discovered what they really wanted was a strict conception of sovereignty. Mr Johnson’s Christmas Eve trade deal gives them that — but at the price of restoring all the trade frictions Thatcher and Cockfield had managed to remove. This might settle the issue if Britain’s self-appointed “natural party of government” has now made up its mind. But with Brexit associated as much with a free-trading global Britain as with a sovereign one, no one can know whether the deal will resolve these tensions permanently.



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