Four different options for the UK in the event of a vote to leave the EU

Discussions on the outcome of a potential referendum on Britain’s membership of the EU have been characterised by political grandstanding, at the expense of serious economic analysis. With Brexit now a real possibility in the next Parliament, the IEA today releases a report outlining four different options for the UK in the event of a vote to leave the EU, all of which take into account both economic challenges and possibilities.

In Brexit: Directions for Britain Outside the EU, various contributors outline several of possible approaches, ranging from a proposal that Britain should promote free trade and openness through the unilateral removal of trade barriers, to maintaining formal relationships with European countries through the European Free Trade Association (EFTA) and/or the European Economic Area (EEA). Other proposals offer a view that the UK should seek to form economic and political alliances with countries outside of Europe, such as those in the Commonwealth.

Option One – Remain a member of the EEA and rejoin EFTA

  • The author of this proposal argues that off-the-shelf alternatives to EU membership already exist and the UK should retain membership of the EEA to take advantage of existing trade institutions.

  • Political considerations in the form of the EU’s vested interests, as well as economic necessity, will leave just one tenable option to be immediately adopted after Brexit. It is proposed that the UK should also rejoin EFTA, which has both economic and political benefits. It allows the UK a formal role in EU/EEA discussions and is also likely to prove popular with the British public.


Option Two – Pursue free trade via Commonwealth advantage

  • This proposal argues that a post-EU Britain should put the Commonwealth and the wider Anglosphere at the forefront of its trading plans. It calls for the UK to re-engage with the world based on free trade agreements (FTAs) and bilateral investment agreements.

  • The strengths of the Commonwealth and the Anglosphere in terms of English language, the common law, geography, the internet, its business environment and low “corruption perception” all point to advantages for British business and citizens from accessing this worldwide system and linkages.


Option Three – Develop a Global Free Trade Association

  • This author of this option plan argues that the debate over Brexit has been too focused on the minutiae of concessions that the Prime Minister may be able to obtain from Brussels, thus placing tactics above strategy.

  • The proposal suggests that the UK should strive to change the very terms of the world in which it is operating, embracing and forming a Global Free Trade Alliance (GTFA) to serve as the primary strategic policy for making the country fit for purpose in an age of globalisation. In the aftermath of Article 50 of the Lisbon Treaty being triggered, politicians must focus on domestic measures to ready itself for coming challenges of sailing into the unknown, whilst working out reasonable parting terms with its European neighbours.

  • Politicians must favour economic liberalism at home, and free trade abroad. EU member states should be treated as importantly as any other countries. Multilateralism must be revived.


Option Four – Prioritise EFTA access and deregulation 

  • This winning entry of the IEA Brexit Prize* called for the UK to negotiate membership of the EFTA, though remaining outside the EEA. The precise degree of closeness proposed is somewhere between the positions of Switzerland and Turkey. The submission also called for the introduction of a ‘Great Repeal Bill’ to bring about a comprehensive review and, where appropriate, repeal, of EU regulations.

  • This path argues that the single highest economic priority in the event of a vote to leave would be to ensure the maintenance of zero tariffs on trade between the UK and the EU in all areas apart from agriculture. It also strongly makes the case for the importance of an exit from the Single Market. Staying in would mean retaining almost all of the most onerous and controversial aspects of EU membership.

  • Brexit must ultimately be a political rather than an economic decision, though the author’s central estimate, if it occurred, is that the UK economy would experience a £1.3bn increase in GDP.


Commenting on the report, Professor Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:

“For too long the debate about our relationship with the EU has centred on the question of ‘Britain – In or Out?’ It is not possible to take a sensible decision on whether or not to leave the EU unless the alternatives are clearly understood. This report lays out four clear paths which, in different ways, will enable Britain to have a free and prosperous economy outside the European Union.”   ”

Notes to Editors:

1. To arrange an interview about the report please contact Stephanie Lis, Head of Communications at the IEA: [email protected] or 07766 221 268.

2. The full report, Brexit: Directions for Britain Outside the EUcan be downloaded here.

3. The IEA takes no position on membership of the EU as such but, as part of its education mission, wishes to promote discussion on how a market economy can best be promoted whether or not Britain remains a member of the European Union.

4. The Brexit Prize was launched in July 2013 to improve the debate about what an independent Britain would and could look like outside the EU, given that exit is an increasing possibility after the next election. The judging panel is chaired by The Rt Hon Lord Nigel Lawson.

Entrants were asked to imagine a referendum has resulted in an “Out” vote and Her Majesty’s Government has triggered Article 50 of the Lisbon Treaty. Against this background, they were invited to compose a Blueprint for Britain outside the EU, covering the process of withdrawal and the post-exit repositioning of the UK in the global trading and governance systems. The winning entry composes on of the proposals featured in this report.

5. About the authors:

Ralph Buckle is a director and co-founder of the Commonwealth Exchange. He has considerable political, campaigning and event management experience, having worked for think tanks, politicians, public affairs agencies and political communication specialists.He has a BA in Politics, Philosophy and Economics (PPE) from the University of York.

Tim Hewish is a director and co-founder of the Commonwealth Exchange. He has a masters in Imperial and Commonwealth History and a strong knowledge of the Commonwealth as author of Common-Trade, Common-Growth, Common-Wealth.

John C. Hulsman is the president and co-founder of John C. Hulsman Enterprises (www.john-hulsman.com), a global political risk consulting firm. An eminent foreign policy expert, John is a senior columnist on foreign affairs for City AM and also writes regularly for the Aspen Institute of Italy and Limes, the premier Italian foreign affairs journal. A veteran of think tanks in Europe and America, Hulsman is a life member of the Council on Foreign Relations. Author or co-author of ten books, Hulsman has also given 1,470 interviews, written over 330 articles and delivered more than 450 speeches on foreign policy around the world.

Iain Mansfield is the Director of Trade and Investment at the UK’s embassy in the Philippines and has previously worked for the Department of Business, Innovation and Skills. He lives with his wife, Sarah, who teaches at the British School, Manila. Iain is also the author of the novel, Imperial Visions, and has a masters in Natural Sciences from the University of Cambridge.

Robert Oulds, MA, FRSA, is the longstanding Director of the Bruges Group, the respected think tank which for the last 20 years has been at the forefront of the debate about the UK’s relationship with the EU and the wider world

6. The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.