What does the UK want from Brexit?
By Scott Sumner
When the UK voted to leave the European Union, many Brexiteers argued that this would allow Britain to move toward free market policies, free of burdensome EU regulations.
Today, the two sides are still engaged in difficult negotiations. Contrary to the arguments made by prominent Brexiteers back in 2016, it’s not at all clear that the EU will agree to a free trade agreement. Interestingly, the sticking point seems to be Britain’s reluctance to follow free market policies:
It is safe to say, though, that any Brexit deal will not fail over fish. The really big issue is what the EU refers to as the level playing field. Within that category, the state aid regime is one of the toughest elements. The EU wants the UK to adopt a legal framework for competition policy that broadly mirrors its own. What the EU fears is a politicised state aid regime where a British government subsidises companies for opportunistic reasons, and thus undermines competition with EU companies. It is highly unlikely UK prime minister Boris Johnson could agree to this.
Here Wolfgang Münchau of the FT is suggesting that Britain’s Conservatives are so eager to start subsidizing their corporations that they are willing to walk away from a free trade deal with the EU rather than forgo that sort of interventionism. Britain has drifted far from the lofty ideals of 2016. But then that’s often how nationalism evolves over time.