Varadkar: UK may get ‘Norway plus’ Brexit

Asked whether the UK would pay for access to EU’s single market, PM May tellingly didn’t rule it out

by BLOOMBERG

DUBLIN • The UK may end up in a “Norway plus” style relationship with the European Union (EU) after Brexit, according to Irish Prime Minister (PM) Leo Varadkar (picture), who pointed to “different perspectives” within the bloc on a future deal with Britain.

Ireland wants to retain as close as a relationship as possible with the UK, Varadkar said in a Bloomberg Television interview in Davos yesterday, yet not all member states are as concerned about future ties.

“We’re very enthusiastic about having a free trade agreement and customs union. I know a lot of countries in central and eastern Europe would have a similar view,” he said. “Other countries that are quite far away from the UK might not be as concerned.”

Any EU-UK trade deal will be a new agreement that could be close to the current arrangements, Varadkar said, warning Britain can’t “cherry pick” on its obligations. Ireland is considered the EU economy most vulnerable to Brexit, with about 15% of the nation’s exports going to Britain.

In December, Varadkar won a guarantee that no hard border will be reimposed after Brexit on the island of Ireland as the price for allowing talks to move ahead.

“It will be a specific agreement for the UK but of course in Ireland we want that to be as close as possible so we would have it ‘Norway plus’,” Varadkar said. “But we need to get into the detail of what that means.”

In what would be perhaps the softest implementation of Brexit, Britain could join Norway, as a non-EU members the European Economic Area. Because the UK wouldn’t be in the customs union, it could strike commercial deals with

other countries, though with exports subjected to customs inspections and compliance tests. This so-called Norway model would mean continued duty-free trade of services, as well as goods within the single market. Banks would be happy, since they could still service EU markets from London by using the financial passport they stand to lose.

“The crucial issue around financial services does put your finger on it in some ways because the City of London would like access to financial services and financial markets but what is the UK going to give in return,” Varadkar said. “What’s it going to open up?”

In a Norway-style scenario, the UK would have no say on changes to market rules, which can be enforced by European judges. And Britain would have to accept free movement of labour, though there are some small ways to impose temporary restrictions on immigration. Also, Norway pays almost as much into the EU budget in per-capita terms as members do.

Meanwhile, asked whether the UK would pay for access to the EU’s single market, PM Theresa May tellingly didn’t rule it out.

May said in a television interview with Bloomberg’s editor-in-chief John Micklethwait in Davos yesterday that she was “very clear that we want to develop a deep and special partnership, a comprehensive trade agreement”.

“Obviously we recognise the importance of the financial services and we want to ensure that we can continue to see those financial services, ensuring the City of London retains its role as a global financial centre” she said.

France’s Emmanuel Macron suggested over the weekend that a deal could cover aspects of financial services — at a price that is both political and financial. Meanwhile, key countries like Italy say it would “totally unrealistic” for financial services to be excluded from a final agreement. While so-called passporting rights are out of the equation, the rest is open to negotiation.

May appeared confident that something could be worked out. She needs to preserve the City as it underpins the British economy, while also satisfying pro-Brexit campaigners who prioritise sovereignty and withdrawal from the jurisdiction of the European Court of Justice (ECJ).

May declined to be drawn into whether the reach of the ECJ was a negotiating chip. “What I see, talking to other leaders, is that sense we would be pragmatic about this and because it’s to the benefit of the EU as well as the UK that we have that good arrangement in future,” she said. — Bloomberg