There can be no “a la carte” access to the single market, the European Council president Donald Tusk has said, as Europe’s leaders agreed that Britain must accept freedom of movement if it wants access.
David Cameron told the full European Council meeting on Tuesday night that concerns about immigration were the key factor behind the country’s vote for Brexit and pushed for reforms to freedom of movement rules, which are currently a condition of single market access.
But following a meeting of 27 leaders of EU member states on Wednesday morning, excluding Mr Cameron, Mr Tusk made clear that the Council shared German Chancellor Angela Merkel’s view that Britain faces a choice between single market access and the power to control EU migration – and could not have both.
"Leaders made it crystal clear that access to the single market requires acceptance of all four freedoms - including freedom of movement," Mr Tusk said. "There will be no single market a la carte."
He also reiterated that there would be no negotiations between Britain and the EU about the terms of a new relationship, until the UK government had invoked Article 50.
6 ways Britain leaving the EU will affect you
6 ways Britain leaving the EU will affect you
1/6 More expensive foreign holidays
The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more
2/6 No immediate change in immigration status
The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay
3/6 Higher inflation
A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum
4/6 Interest rates might rise
The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output
5/6 Did somebody say recession?
Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018
6/6 And we wouldn’t even get our money back
All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget
Mr Cameron told MPs today that, contrary to reports, there had been no “great clamour” from EU leaders at Tuesday’s summit for Britain to invoke Article 50 immediately. He has previously said that it would be for the next Prime Minister, due to be in place by September 9, to do this.
“While there one or two voices calling for this, the overwhelming view of my fellow leaders was that we need to take some time to get this right,” he said. “Of course everyone wants to see a clear blueprint in terms of what Britain thinks is right for its future relationship with the EU.”
He said that models for Britain’s relationship could include: Canada, which has access to the single market for some of its goods, but crucially not financial services; Norway, which has single market access but abides by freedom of movement rules; and Switzerland, which has single market access for industries, but not for the banking sector, and accepts freedom of movement.
The precise terms of Britain’s access to the tariff-free single market – which is vital to the economy and jobs market – will be key battle-lines in the Conservative leadership election and in the subsequent talks between the new Prime Minister and European leaders.
After the Leave campaign won on a promise to cut immigration, the new Prime Minister will be under great pressure to get a deal that does not include acquiescence to freedom of movement rules. Boris Johnson, the frontrunner, has indicated to supporters that he wants to ensure the UK remains outside the free movement area. However, European leaders’ current stance indicates that any such approach would condemn Britain to life outside of the single market and the economic benefits it brings.Reuse content