Britain’s Battle of Brexit has an internal dimension

One of the chores of the Brexit process is the repatriation of powers from Brussels to Westminster.  Simple as making a list you might say.  But one aspect – bringing home the state’s economic regulatory powers – is causing a spat.

When the UK joined the European Economic Community (as it then was) in 1973, these powers were held at the national level.  But since then, in addition to ceding further powers to Europe, the central government has devolved substantial retained powers to regional administrations in Edinburgh, Cardiff and Belfast.  And the local politicians – seeking to advance their localist and autonomist agenda – are clamouring for a share of the handback.

So Westminster’s mandarins and politicians have come up with a plan, with a refreshingly deep foundation in history, economics and – yes – politics.

They propose (in a white paper published last week) to devolve quite a chunk of regulatory powers to the devolved regions but under the aegis of a unified UK internal market.  Crucially, this means that any entity complying with the rules of its territorial region (say Wales) can trade into another (say England).  This ensures competition between regulatory regimes, with consumer preference the deciding factor.

In other contexts, this goes under the headings of mutual recognition and non-discrimination, and it is a driver of innovation and greater productivity. The white paper draws lessons from the experience of other countries, including Switzerland, Spain, Australia and New Zealand (aficionados turn to Annex B on page 98).

Even the crustiest Brexiteer and the shrillest Remainer might enjoy the ironies. Britain, having left the European single market it did much to build, wants to confirm its own internal market on similar semi-federal principles. Meanwhile the developed regions, seemingly content with European-imposed mutuality are jibbing at its application from London. 

Both positions are buttressed by logic.

From the Westminster perspective, the internal market is essential to the economic and political integrity of the UK. Boris could not strike trade deals covering the entire country without it.  It is a template for what the British government wants in its succeeding relationship with the European Union.  And a wider external strategy based on mutual recognition, while by no means assured of success, offers the UK more scope for competition and growth than a European-style approach of painstakingly negotiated common standards.

Meanwhile, the devolved administrations can also read the runes.  For them, it’s an opportunity to acquire more power to develop and perhaps amplify differences between the UK’s constituent regions.  Scotland’s administration sees that it will either take a stride towards independence or alternatively develop a fresh grudge to deploy against Westminster.

In the meantime, policy wonks can watch the progress of an expedient policy thoroughly rooted in exemplary principle.


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