Cutting the Gordian Knot: A Road Map for British Exit from the European Union

This study was originally published at the Institute for Economic Affairs as a finalist for the 2014 IEA Brexit Prize coauthored with Rory Broomfield.
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A decision to leave the European Union (EU) will require three main actions Her Majesty’s Government (HMG).

First, HMG will need to invoke Article 50 of the Treaty of European Union and commence negotiations on the terms of the United Kingdom’s (UK) withdrawal.

Secondly, HMG will need to present to Parliament a bill repealing the various laws that have established the UK’s membership of the EU and enabled the incorporation of EU law into UK domestic law.

Thirdly, HMG will need to review the body of EU law already incorporated into domestic law to ascertain what can be safely repealed and what should be retained.

This submission will first examine the most important question relating to the Article 50 negotiations: whether the UK should attempt to enter into a relationship with the EU like that of Norway or Switzerland (“The Norway option”) within the European Economic Area or a less stringent version of that relationship (“EEA-lite.”)

Secondly, this submission suggests that the second and third actions can be combined into a single bill that repeals various acts and on that authority establishes a Royal Commission on Regulatory Reduction with special powers to present packages of reforms to Parliament.

Finally, this submission will outline various policy issue areas where special measures will need to be taken, either in the Article 50 negotiations or requiring separate legislation or other measures. In several cases, withdrawal from the EU will enable HMG to pursue a new course of action that will provide significant benefits for the UK.

While this submission attempts to quantify costs and benefits where possible, it should be recognized that in many cases this is an extremely speculative exercise; putting figures on the costs would merely be pretence of knowledge. In these cases, we estimate whether costs/benefits would be:

• High: a significant cost or contribution to the nation’s economy that would need to be accounted for in extraordinary ways, either by additional appropriations measures or enabling significant savings to government, such as tax cuts or closing down a department of state;
• Medium: a cost that would require some adjustment to the ordinary way of doing things or a benefit that would enable savings within a department or such like; or
• Low: no appreciable disruption or benefit to the economy or government.