BREXIT: EU and UK encouraged to engage in new 'continental partnership'

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The proposed arrangement would be "considerably less deep than EU membership but rather closer than a simple free-trade agreement", according to a paper by five prominent economists.

The paper was co-authored by Jean Pisani-Ferry, policy advisor to the French prime minister, Norbert Röttgen, former German government minister, André Sapir, professor of economics at Université Libre de Bruxelles (ULB), Sir Paul Tucker, former deputy governor at the Bank of England, and Guntram Wolff, member of the French government's economic advisory body Conseil d'Analyse Economique.

"We believe that departing from the standard templates is essential for the success of the UK exit negotiations," the paper said. "Without a common vision of their shared future over the longer term, the UK and the EU risk being dragged into unprincipled bargaining and, albeit in slow motion, weakening their positions in the wider world."

According to the proposals, the 'continental partnership' would see the UK, and potentially other non-EU members such as Switzerland, Norway, Iceland and Liechtenstein, gain access to the EU single market by adopting select policies "consistent" with that access. The arrangement would also involve their participation in a new "system of inter-governmental decision making and enforcement". In addition, the countries would have to contribute towards the EU budget and engage in "close cooperation [with the EU] on foreign policy, security and, possibly, defence matters".

The economists described the continental partnership as "a less-political definition of economic cooperation-cum-integration" than existing EU membership entails.

"Most important, CP countries would not participate in the freedom of movement of workers, would not share the political commitment to ever closer union, and would have less political influence over decisions of common interest," the paper said.

For the continental partnership to materialise, the UK will have to decide "whether it wants to continue to maintain close economic cooperation with the EU and whether it wants to maintain and potentially even strengthen its engagement in security and, conceivably, defence matters". For the other 27 EU countries, they will have to agree to "put aside punitive motives and reach an economic settlement that grants control over labour mobility to the UK while allowing continued access to and participation in important parts of the single market", the paper said.

While the UK, and potentially others, would operate in an "outer circle" of countries as part of the new partnership, the remaining EU members would participate in a reformed "inner circle" which would include "a strengthened euro area", the economists proposed.

"We see the deepening of the euro area and the building of a continental partnership, in what would amount to concentric circles, as close complements that are in the interest of both the UK and the EU," they said.

The economists said they do not believe that neither the UK nor the other 27 EU countries want "an escalation of tensions or costly disengagement following Brexit" and so should embrace their proposals.

They said: "Today’s volatile and dangerous world requires its nations to collaborate to confront new and multiple challenges. The longer-run prospect of a future world in which Europe is only one amongst many powerful regions demands the same. Brexit is now a reality. It carries risks. It can be turned into an opportunity. We hope that our proposal can provide a benchmark, even a vision, for the undoubtedly difficult negotiation that lies ahead."