UK’s relationship with the EU enters fragile stage

Imagine, for a second, a report written by an official from the Department of Foreign Affairs that detailed how Ireland might exit the euro and reconstitute the punt, describing all the new institutional arrangements that would follow such a policy decision.

The report might say that the author was not advocating this policy, was written in a purely personal capacity and, therefore, should not be described as reflecting the views of either the department or the Government. Imagine the strong conclusions are that a transition to the punt could be managed and be successful.

Notwithstanding the disclaimers, we might smell a rat. Or perhaps we could take it all at face value. Either way, we would sit up and take notice. At the very least, we would wonder why the authorities would permit publication. It would be quite a provocative act.

A relatively junior official in the UK foreign office has just won a €100,000 prize for describing how the UK might successfully exit the EU. It is perhaps ironic the prize is denominated in euro.

As befits a smart bureaucrat, precise and detailed information is presented on the relevant treaty articles that would be invoked to legally permit a departure. A possible timetable is outlined.

The likely post-exit political and economic arrangements, both with the EU and the rest of the world, are analysed in great depth.

The economic consequences for the UK are argued to be positive. The author claims it can be done and it would be to the ultimate benefit of the UK. He is careful not to advocate the UK should leave the EU, and there are loud disclaimers distancing the government from the report.

Nevertheless, the authorities permitted its entry into a competition sponsored by the Institute of Economic Affairs and have not prevented publication. For policy wonks, it is a compelling read. For everybody else, its mere existence should be riveting.

Sensible or terrifying?
Iain Mansfield, a diplomat working in the UK embassy in the Philippines, is a Cambridge-educated scientist. I'm not sure how diplomatic he has been in suggesting a Leaving the EU Act of Parliament be brought in two years after activation of article 50 of the Lisbon Treaty. Apparently, that would pave the way for legal secession. He also proposes a Great Repeal Bill, based on a piece of UK legislation called the Public Bodies Act, which would review and (mostly) repeal all EU legislation the UK has enacted over the years. This would take, according, to his estimates, about three years. All very detailed and all very sensible or terrifying, depending on your viewpoint.

A key conclusion is the EU exit should be accompanied by policies, including tax breaks, that would reorient British trade towards emerging markets, which is where he assumes most of the world’s growth will come from. It is assumed the EU remains a low- or no-growth economy. The mere absence of suffocating EU regulations would, he argues, be a significant boost to business. Noteworthy from an Irish context is his proposal to cut UK corporation tax to 15 per cent.

At the same time, the vote on Scottish separation from the UK is getting closer. Opponents of independence are still in the majority but there are enough “don’t knows” to swing the vote either way. Dismemberment of the UK remains odds against but it is still a real possibility.

For both its economy and foreign policy, the potential for the UK to leave the EU is the biggest “known unknown” facing Ireland.

We can only assume – and hope – officials here are quietly working on what our response will be. UK partition would be the icing on the cake, also with potentially profound implications for Ireland.

Mansfield’s prize-winning report may or may not be a flight of fancy. The impending UK general election may well deliver a government that is not committed to a referendum on EU membership. But it might. And if that question was asked today, it is highly likely the British would vote to leave, if the popularity of Nigel Farage’s UK Independence Party is anything to go by.