With 'Hard' Brexit receding, where does the EU go now?

Giles Merritt explores the implications of a failed Brexit and the return to Brussels of a chastened UK. Can the EU ever be the same again, and should it?

Never mind London’s more upbeat mood music, only fanatical Brexit die-hards still believe the UK will have quit the EU by the end of this year. Indeed, Britain may not leave at all. British politics are now so volatile and unpredictable that no one can say, but the betting odds increasingly favour the status quo ante bellum with the UK staying in the EU.

This doesn’t promise a return to business as usual. On the contrary, the aftermath of ‘Brexit Denied’ risks destabilising all of Europe. And in the UK, the battle lines will inevitably stay drawn, poisoning politics for the foreseeable future.

Throughout continental Europe, public opinion has mostly seen Brexit as a bizarre aberration, fuelled by nostalgia for the bygone glories of an empire that once stretched around the world. It’s certainly true that the Brexiteers’ arguments for leaving were so unconvincing that they instead highlighted the value of EU membership.

But that doesn’t mean the EU can say ‘game over’ and chalk up a victory over wrong-headed English nationalism. In the five years since the start of campaigning over Brexit, uncomfortable truths have emerged over the EU’s political architecture and its strategic shortcomings.

The criticisms voiced by the more thoughtful Brexiteers – admittedly few in number – are soundly based, and shared with many advocates on the continent of genuine EU reform. The EU’s governance arrangements and its democratic base are unwieldy and unsatisfactory; it is a self-perpetuating oligarchy that has failed to win the trust and confidence of enough voters.

If the UK does indeed return to the EU fold, a chastened British government will be required to play a much more constructive role, ending decades of grudging ‘semi-detached’ membership. Some opt-outs would probably remain, like not being in the eurozone or Schengen’s open borders, and some key parts of Justice and Home Affairs (JHA) legislation, but London would find it hard to withhold collaboration in other important areas.

On defence, the UK’s alibi of preferring NATO to the EU’s nascent ‘defence union’ has been weakened by Donald Trump’s ‘America First’ stance, and now his betrayal of Kurdish allies against ISIS by greenlighting Turkish assaults on them. NATO risks becoming less of a comfort zone.

Once firmly back in the EU, Britain would be under heavy pressure to spearhead European defence rather than denigrate it. Much the same can be said of Europe’s common foreign and security policies, where London’s faith in its ‘special relationship’ with Washington often weakened the EU’s aim of speaking with one voice.

On industrial policy, technological research and new global rules for the digital age, the cruel realities of attempting to go-it-alone were laid bare for UK policymakers by the Brexit debate. And on financial services and banking, the City of London was left in no doubt that anything other than a very soft Brexit would have seen it squeezed hard between its European and US competitors, and increasingly vulnerable to Asia’s financial marketplaces. In all these areas, Brussels could expect to welcome back a newly enthusiastic and positive Britain.

But what if the EU-27 decided to punish the British? Even worse, what if the EU-27 concluded that the collapse of Brexit meant that all is well with the European Union so no significant reforms are needed?

The lesson of Brexit is surely that although botched by opportunist politicians who were defiantly ignorant of the realities, it was symptomatic of a widespread European malaise. Falling living standards, rising uncertainties of globalisation and digitalisation, and looming demographic pressures have yet to be met by a convincing EU strategy. In Brussels there are calls for “a new narrative”, but across Europe there are demands for a new EU.