World economy

3. The future prospects of UK-EU relations in the context on the EU-UK Trade and Cooperation Agreement

Before engaging in strategic foresight on the likely impact of Brexit first task is one of understanding and “making sense” of the process, the substance and the context. To do so the chosen approach is largely discursive, building on existing literature as well as on information available through official sources and the press. The analysis of this information needs to accommodate and account for several uncertainties linked to the direction of the upcoming negotiations. The starting point is constituted of the following three observations that stand out when examining the state of Brexit-affairs in EU external relations.

First, Brexit reduces the influence and shaping power of both sides, the UK and the EU. Currently, the issues of security, migration, citizens’ rights of foreign residents and, above all, trade dominate the Brexit debate. The form and conditions for further involvement of the UK in EU external affairs have yet to be defined. Overall, EU-UK co-operation will become less structured, less predictable and more strongly subjugated to British national and trade interests. The weakening of Europe's posture, its foreign policy, diplomatic and military capacity as well as its economic power may result in a series of negative reciprocal effects for international security, development co-operation and multilateral processes.

Second, the external security agenda plays a pivotal role in the Brexit negotiations as well as in British politics, and has already been instrumentalized as a bargaining chip to achieve concessions from the EU. Concomitantly, the political forces that gained the upper hand in the UK during the Brexit referendum give rise to fears that a shift in political culture and a reduction in the commitment to the “spirit of sincere cooperation” and the significance of multilateral cooperation in British politics could come to pass. Even if the general elections on8 June did in the end not strengthen the government’s Brexit mandate and critics vocally oppose full withdrawal from the Union, Downing Street confirmed its intention to pursue a “hard” negotiation line vis-à-vis Brussels. Thus, which form the UK withdrawal will finally take is more unpredictable than ever.Third, the centre piece of an EU-UK relationship is an agreement on trade in goods and services, and the effects of Brexit will clearly be felt in international commerce, between large trading powers as well as with developing and emerging economies, presenting these with uncertainties as well as specific challenges and problems. It may also empower them to weigh-in on the leave process, in as much as the situation presents opportunities to improve existing trade and partnership agreements, and to adopt innovative approaches to economic development and investment policies. Brexit and any new options that emerge from the departure could be viewed as a reform incentive for the EU to enhance the coherence of trade and investment policies with development cooperation as well as other related policy areas. Benefits from more effective co-operation at EU level could partially compensate for the loss of the UK. Departing from these considerations the article will, in the next section, present the two-fold research approach of understanding and scenario-building. Based on these, the remaining sections will consecutively follow the leads of the negotiation process, the substantial issues and the wider political context to assess the likely impact on the EU’s external policy dimension. While, at this point of time, conclusions remain highly speculative in nature, the analysis aims at contributing to developing the instruments for studying phenomena of regional disintegration.