The report acknowledges the argument which Leave campaigners make that Britain’s trade deficit in goods gives many EU countries some incentive to seek a free-trade agreement with the UK. Other states, “would remain interested in keeping good political relations with a close and important neighbour,” the report says.
But it adds that this incentive to co-operate is likely to be outweighed by other considerations. Listing the “strategic misconceptions” of Britain, it notes, “the UK would rely more on market access to the EU than vice versa” and “political considerations could outweigh economic considerations, as the EU might fear that other [member] countries could follow the UK in exiting the EU”.
“As with Switzerland, the EU’s inclination to co-operate could worsen, if the UK chose to significantly restrict labour migration from the EU,” the report adds.
Moreover, there would be “no free lunch” in terms of reducing the regulatory burden. The more London sought freedom from EU rules, the harder it would be to maintain market access to the union.
Monday, 11 April 2016
Financial Times: Britain warned not to expect easy Brexit negotiations