UK-EU Deal will have to allay voters concerns while not excessively damaging economy. How to do it?

With the Home Office having recently dropped the Australia-style points system that Brexiters had promoted, the FT examines the benefits and drawbacks of the options open to the UK’s negotiators. A deal will have to allay the concerns of voters without excessively limiting access to the single market in order to fulfil Theresa May’s pledge to “make a success” out of Brexit.

Free movement (up to a point)

The idea In the absence of a deal to give the UK an “emergency brake” for levels of migration, the UK could impose limits on the amount of National Insurance numbers it issues to EU workers in any given year.The government could set an annual ceiling which, once reached, would force European Economic Area nationals wanting to come to the UK to apply for entry in the same way as non-EU nationals do now. EU citizens would be free to come and go on business trips and holidays as they do now, and allow the government to have some control of the overall number of people coming to work in the UK.

The problem It would take a very skilled negotiator to persuade their European counterparts that this does not contravene the free movement principle. The result is that it would either be rejected or come at a considerable cost in trade negotiations. Under this approach the government would be unable to exclude the at least 1.5m EEA nationals with NI numbers who do not live in the UK at present.

Norway, Switzerland and Liechtenstein

The idea As a member of the EEA, Norway has full access to the EU’s single market and, in return, accepts free movement of people. However, the nordic state has a safeguard clause that allows it to put a stop to immigration in the event of severe social, economic or environmental need. The criteria for what would constitute those needs is not spelt out and Norway has never used the temporary power because it would trigger a retaliatory response from the EU.

Switzerland, although not a member of the EEA, has its own free movement agreement with the EU but, in a referendum in 2014, the Swiss voted to introduce quotas on EU migrants from 2017. If the Swiss impose controls, the EU has threatened to suspend other EU-Swiss agreements linked to trade and other areas, limiting market access to the EU for Swiss firms.

Liechtenstein has perhaps the most palatable arrangement for British voters as it is allowed to limit free movement unless workers come with a job offer. It offers only a few dozen residency permits a year and has powers to rescind them.

The problem Appealing as an off-the-shelf system might seem it would do little to curb immigration unless Britain is prepared to accept the threat of curbs on market access for its firms. Given that both Norway and Switzerland have had higher immigration levels per capita than the UK, voters would want something far tougher, he argues. The Liechtenstein model may be more to the taste of British voters, however it is a small Alpine principality of 36,000 inhabitants, not the third most populous country in the EU.

Free movement of employees

The idea David Cameron failed to get an agreement during pre-Brexit negotiations to only allow EEA citizens with a job-offer permission to come and work in the UK. While that proved too restrictive for EU leaders, a tweaked version might now seem more attractive. The rights of work seekers could be curtailed significantly, for example by restricting the period of search to the basic three month residence period. The UK could require migrants to register with the authorities after three months — as they do in Italy, Austria and 10 other EU countries — and demand their return home if they are not in work. Any such changes would not “interfere with the fundamental principle of free movement,but collectively they might provide some reassurance to those UK citizens concerned about uncontrolled migration.

The problem While this approach may just about satisfy EU negotiators, it is unlikely to go down well with British voters as it would be unlikely to do much to cut immigration. Plus, a national database of foreign workers to keep tabs on who is outstaying their welcome would be expensive to set up and police, and would annoy civil liberties campaigners.

‘Take back control’

The idea

The government would do whatever necessary to deliver its manifesto commitment to bring annual migration down to tens of thousands of people. Visa-free travel for tourists and business people would be maintained. The country could have measures to attract investors and offer service-sector companies some flexibility to hire from the EU. A fairly open regime could be maintained for skilled workers, in which family members can accompany the main earner, while students could come and go in order to protect universities.

The problem Britain would be denied access to the single market. It would trigger the need for trade deals not just with the EU but with other parts of the world that could take many years to complete. That uncertainty would most likely deter investment by foreign and domestic firms.

Future for recent arrivals to UK in doubt

The status of as many as 590,000 EU citizens living in the UK could be at risk once the Article 50 process is complete and the country has detached itself from the other 27 nations in the bloc. Analysis assume that date will not come until 2019, two years after the triggering of the UK’s departure process next year. By that point more than eight in 10 of the 3.6m EU citizens living in the UK would meet the five-year residency test that would allow them the permanent right to remain, the foundation estimated. The fate of EU citizens in living and working in Britain has been uncertain since Mrs May, while campaigning to be prime minister, said she would not guarantee their right to stay. She later reversed her stance after accusations that she was treating them as “bargaining chips” in exit negotiations. Her aides suggested their legal status would be guaranteed as long as British nationals were treated in the same way in other countries in the EU. The London-based think-tank said on Monday that it is probable that EU citizens arriving in the UK before 2014 would have permanent residency rights by the time Brexit occurs and that it would be “very difficult, if not impossible” to rescind those rights for the overwhelming majority of EU citizens in the UK. But the future for more than half-a-million more recent arrivals to the UK would be less certain.

Applying the same immigration rules currently in place for non-EU citizens would mean as many as 80 per cent of those without residency rights would not meet the criteria to stay. Were the UK to remain in the European Economic Area, which has free movement of workers, even if only as a transitional phase while it negotiates its own trade and immigration policy with the EU, would see many more within the “at risk” group eventually qualify for residency.

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