Brexit could finally spark reform of the EU

After talk of a second referendum it should now be clear there is no going back

Angela Merkel has already spoken of the EU’s need to better serve its members (AP)

There were flickers of an idea, in the immediate aftershock of the Brexit vote, that a second referendum might soften, or even reverse, the separation of the UK from the European Union. It should now be clear, both from the response of EU leaders and from the statements of intention by all five candidates for the Conservative Party leadership, that there is no going back. At least not in the near future, and not on the same privileged terms as the UK currently enjoys.

Even the compromise models of semi-detachment – Norway and Switzerland – that would leave the UK as a member of the European Economic Area (EEA), but not the EU, have been effectively rejected because they presuppose “free movement”. It would be to fly in the face of the vote to accept essentially the same terms the UK has now, but without a seat at the decision-making table.

More to the point, there is no sign whatsoever that an EEA deal minus free movement would be on offer from the EU, both because of the risk of “contagion” – other countries seeking referendums on membership and special deals – and because the UK was already, to an extent, semi-detached in not being a member of either the Schengen zone or the euro. This special status is one reason why the immediate impact of the UK’s departure on the European Union may be less, as seen from Brussels, than from London. The UK was never a full member of the club, either for economic or security purposes.

The UK’s financial contribution, as the EU’s second largest economy, will be missed – but not as much as it would have been without the Thatcher rebate. And when the chips were really down and the EU needed funds to help bail out first Ireland and then Greece, the UK preferred to work through the International Monetary Fund (IMF) so as to avoid the danger, for domestic politics, of appearing to share liability for improvident euro economies. The same would be possible again, if a post-Brexit UK saw it as being in its interests to fend off the collapse of the euro, which is not impossible, given the likely continuation of euro-denominated trade.

Without the UK, there would seem to be two ways for the EU to adjust and evolve, and a third – its eventual collapse, if the centre fails to hold under the pressure from the centrifugal forces unleashed by the UK’s departure. In the longer term, complete disintegration cannot be ruled out. Doubts about the sustainability of the euro would be a big reason. But Brexit would be another. The UK is not only the first EU member to vote to leave – summarily reversing more than a half century of growth and expansion – but the second largest in terms of economic weight. It cannot be excluded that others might be tempted to follow.

For the time being, however, this looks unlikely. While Germany and France have been talking about increasing, rather than decreasing, cooperation, Angela Merkel has also spoken, in the immediate aftermath of the UK’s vote, of how the EU needs to change to serve its members better, implicitly recognising a disconnect between Brussels and European electorates. One consequence could be a looser, more a la carte, European Union, with no expectation, for instance, that all members present and future would join the euro and an acceptance of national distinctions in benefits that could make it more difficult to move elsewhere for work. In that event, the UK’s departure could spur the EU to develop in a way that might, paradoxically, have persuaded the UK to stay.

It is not at all apparent, however, that Germany, in particular, is ready to give up on the idea of “ever closer union”, if not in those exact words. Merkel’s first move after the UK referendum was to convene the six original members of the EU (then the Common Market), which offered a reminder of the early idealism. A revival of the political project, as envisaged at Maastricht in 1989, could speed evolution towards a two-speed Europe, with non-euro and non-Schengen countries, relegated to associate membership or similar, and others – such as Greece – leaving the euro to join them.

Such a pattern might make further expansion possible – even to the contested east, to include countries such as Ukraine. But there would be ambivalence in the countries of “new” Europe. On the one hand, they regarded EU membership as proof of their European credentials and would oppose any change that smacked of second-class status. On the other, they are loath to give up any of their sovereignty as newly restored nation states, as seen in their resistance to quotas for non-European refugees. So they might have no choice but to accept a two-tier Union, especially as the UK would no longer be there to champion their cause.

Which leads to a further conclusion. Whatever course the EU now takes, it is bound to look and feel rather different. Without the UK, it will be less Atlanticist and more Continental, in allegiances as in character. The US may maintain its presence and influence, but it will be as an outside power; the UK will not be there as bridge or proxy, and no amount of talking between Berlin and Washington will alter that.

The distinction between the EU and Nato, which had been lessening, could also sharpen again, as the UK leaves the former but remains a force in the latter, and Germany – with its queasiness about military engagements – becomes the ultimate arbiter in the EU.