The United Kingdom left the European Union on January 31, 2020. Trade barriers have not gone up immediately, because a transition period is in place until December 31, 2020. The EU and the UK negotiators are working on an agreement to govern trade and other aspects of relationships across the English Channel. It is not clear whether or not a new deal will be in place by the end of the year. 

Whether or not a post-membership deal is in place, however, Britain is no longer at the EU’s decisionmaking table. The EU no longer has a British commissioner, and the UK has lost its seats in the European Parliament.

How will the absence of Britain affect EU strategies and outcomes in the years ahead? The answer in the short and medium-term may be obscured by the coronavirus pandemic, but it is nonetheless important to the United States.

Britain took positions in EU councils that were in its own interests. It was never a Trojan horse for the United States, but over the decades, Britain and the United States often were in general agreement on economic, political, and security strategies, such as liberal, pro-competition economic policies and North Atlantic Treaty Organization-centric security strategies. Washington relied on London to make arguments to its European partners in favor of such strategies behind closed doors, and to explain to Americans what the EU was doing and why.

This is an assessment of how Britain’s departure from the EU may change the EU, and what such changes in Europe may mean for the United States. It looks at the impact of the departure in three dimensions: (1) on EU policy preferences, (2) on doing business in Brussels, and (3) on the balance of power after Brexit among the remaining twenty-seven member states. The appraisal is based in part on in-depth interviews held under the Chatham House Rule with former senior European officials, each of whom has had years of experience within EU institutions, and on published analyses. It is necessarily speculative, and for now, cannot examine the likely economic consequences of any post-membership agreement that the UK and the EU may reach later this year. The economics of the various models for post-membership UK-EU relations were set out in previous RAND Corporation studies.

What Hasn’t Happened

A good starting point for assessing what the British departure will mean for the EU is to consider what hasn’t happened. For example, it was initially feared (or awaited eagerly, depending on the point of view) that Brexit would lead other EU member states to re-evaluate their commitment to the EU. But in national and European Parliament elections in the aftermath of the 2016 referendum, voters in the Netherlands, Austria, and France reduced support for euro-skeptic parties, though anti-immigration sentiment remained strong. Although a number of Italian politicians fulminated about the EU’s lack of economic support for Italy before and during the coronavirus crisis, most parties rejected Mario Salvini’s anti-EU screeds and pushed him out of government. In any case, an Italexit is unlikely, especially given how dependent Italy is on European financial support.

Conversely, some European commentators predicted that an EU without the UK might plunge ahead with deeper political integration. This was the focus of French president Emmanuel Macron’s September 2017 Sorbonne speech but didn’t win broader support among other EU member states. Since the beginning of the coronavirus crisis, there have been calls for “more Europe” but mainly in health affairs (which is now a mainly national competence). For now, there is little evidence of political deepening even without any UK opposition to it. Member states in the east, especially Poland and Hungary, actively oppose any hints of federalization and stymie efforts to develop common policies to deal with migration or judicial oversight. One major exception is the debate over EU aid to ameliorate coronavirus-related economic effects, and whether to fund it with limited borrowing at the EU level, discussed further below. But overall, despite the UK’s departure, there is no momentum for more federalism in today’s Europe.

Policy Preferences

Britain’s departure will change things in Brussels over time. Since David Cameron’s first government in 2010, the UK steadily has been less prominent than it once was in EU policymaking. The UK withdrew even further from the policy process following the Brexit referendum outcome in June 2016.

For most of its more than four decades as an active EU member, the UK was a prominent advocate for liberal, pro-competitive policies for the EU. The UK advocated strongly for creating the Single Market, as famously recommended in the white paper prepared by a group led by Lord Arthur Cockfield. Britain also pressed hard for liberalization of the European energy market, linked its electricity and gas markets across the Channel, and welcomed European investment in its energy industries. Britain favored strong competition policies and opposed protectionist approaches, such as making extensive use of EU anti-dumping and countervailing duty instruments.

Brussels veterans suggest that the impact of Britain’s departure may not be dramatic for two reasons. First, while a liberal (free market) economic approach is the Commission’s underlying preference (and the source of its institutional power), the broader global environment is less encouraging and the EU, even with the UK as a member, had been moving away from it. Second, today’s issues—including a European focus on constraining tax competition, especially in the digital realm—do not lend themselves to the traditional liberal or dirigiste ideological spectrum. Almost as much as France, Britain has been concerned about tax evasion by large multinationals—especially by Facebook, Apple, Amazon, and similar large U.S.-based digital firms.

Nevertheless, the coronavirus health crisis and the general trend against globalization are having an effect on policy approaches in Brussels and in member states. In May 2020, a group of nine retired senior European Commission (EC) trade policy officials sent Commission President Ursula von der Leyen a letter urging the Commission to increase the effectiveness of its trade defense instruments (antidumping and countervailing duty procedures) in order to combat Chinese and U.S. subsidies and other distortions. The German government took a 20-percent equity stake in Lufthansa in exchange for aid and is putting in place a new industrial policy with a state capitalism gloss. In France and Poland, ministers are calling for “food patriotism,” preferring to buy local even at the expense of other EU member states.

Prior to the coronavirus crisis, it appeared that the loss of the UK’s net budgetary contributions would seriously affect the funding of the seven-year multiannual financial framework (under negotiation as of mid-2020) that the EU would have available for common projects (such as trans-European networks) and cohesion transfers to poorer member states in the Union’s south and east. In response to the sharp economic collapse associated with the response to the coronavirus disease, however, EU finance ministers decided to fund the economic recovery in the short term with a €750 billion recovery fundraised by borrowing for the first time collectively as the EU. Hard-hit countries will get access to €390 billion of the fund on a grant basis. Over the longer term, the EU member states agreed in the seven-year budget perspective to break through the budgetary threshold of 1 percent of EU gross domestic product to fund economic recovery. These are two major steps toward financial solidarity at the EU level, but it took a marathon five-day EU summit to get it done in the context of the coronavirus emergency. It may be years before another such example of fiscal federalism is attempted.

If it had been a member, would Britain have blocked this spending, or gone along? It is hard to know but in London Chancellor of the Exchequer Rishi Sunak’s summer statement including a £30 billion coronavirus-related job support package and sharply increasing borrowing totals. The coronavirus seems to have affected the calculations of even the most prudent governments.

One area where Britain as a member affected EU policymaking, and where its departure will be noticed, is the social policy agenda. For many years the UK was effective in opposing social policy initiatives proposed by the Commission or other member states. Britain negotiated a limited opt-out to the Working Time Directive and helped block more-ambitious social policy initiatives. This is one reason why the EU27 (the EU minus the UK) negotiating position in talks about a follow-on agreement with the UK is so determined in seeking commitments for a “level playing field.” EU member states fear that competition from UK firms with laxer social policy will affect member states since UK producers would have lower costs of production.

In other areas, such as development or climate policy, the UK was solidly in the middle of the EU consensus and its departure from the council table is not likely to affect outcomes. On climate policy, however, the UK is overfulfilling Paris Climate Agreement targets, so the UK’s withdrawal will affect whether the EU will be on course to meet its collective target.

Britain’s absence will certainly be felt in relation to the EU’s foreign and security policy. How the EU adapts—and the broader significance for the wider global community—will depend on member state responses, especially those of large states such as France and, to a lesser extent, Germany. The UK is one of the EU’s two most internationally-minded member states (France is the other) with a traditionally global outlook. It has a UN Security Council seat. Therefore, the UK’s involvement gave heft and substance to the EU’s efforts to devise (on an intergovernmental basis) a coherent and active foreign policy backed up by security policy instruments.

But even before Brexit, EU security policy, given substance by the creation of the European Defense Agency and direction by Permanent Structured Cooperation (PESCO) among member states and the External Action Service, also had a strong bilateral component. In 2010, in the context of the recent French integration into the NATO military command structure, the UK and France signed the Lancaster House Treaties. These treaties committed both sides to deep and pragmatic collaboration in their nuclear and defense systems, special forces operations, counterterrorism, and foreign policy. The commitments are unaffected by Brexit; Britain and France intend to celebrate the ten-year anniversary of the Lancaster House Treaties in November 2020.

The loss of the UK as a member will affect the credibility of the EU itself as a security actor. The UK has one-half of the EU’s nuclear submarines, heavy drones, and transport aircraft; more than one-third of its electronic intelligence aircraft; more than one-quarter of its heavy transport helicopters; and around one-fifth of its frigates. In an op-ed published March 4, 2019, prior to a pivotal European Council meeting on Brexit, Macron proposed the creation of a “European Security Council” that would include the UK. The idea, which hasn’t received much support, expresses the French concept of concentric European security circles with France at the center.

Alternatively, and more likely, France and Germany may seek to continue to work with the UK in the EU3 (UK, France, and Germany) format, which they collectively used to negotiate the Iran nuclear agreement (though in that case supported by the EU’s External Action Service and High Representative).

On security policy more broadly, the loss of the UK will be felt, in some ways more acutely. The highly effective Executive Director of Europol Rob Wainwright (who served for nine years), did much to establish the Europol as a security pillar and build good habits of cooperation against cybercrime, organized crime, and terrorism. Several experts also lamented the loss of access to UK intelligence resources that are important to sanctions designations.

Doing Business

When the UK joined the EU in 1973, the organizational characteristics of the EC and its working practices were very much in the French tradition. The French socialist and legendary first Secretary-General of the EC, Emile Noël (who remained in that role for nearly thirty years, from 1958 to 1987), put in place the working methods, the working language (French), and the organizational template for the commission services. Noël’s intention was to establish and nurture a European civil service of fonctionaires that would take a European view and see itself as the vanguard of the European construction—le système Communautaire—envisaged by Jean Monnet.

But on their arrival in 1973, the British brought a different, more pragmatic problem-solving style to the Commission. British civil servants seconded to Brussels from Whitehall insisted on better-quality Commission proposals with impact assessments conducted earlier and more comprehensively. Slowly, but with increasing momentum following the enlargements of 1994 (European Free Trade Association members Sweden, Finland, and Austria) and the 2000s (Central and Eastern Europe, the Baltics, Romania, Bulgaria, Cyprus, and Malta), English superseded French as the working language in the Commission, and UK regulatory pragmatism overcame vanguardism. The UK’s David Williamson (Lord Williamson of Horton), succeeded Noël in 1987 and served as secretary-general for ten years, in part under Commission President Jacques Delors, with such accomplishments as the completion of the Single Market and the decision in the Maastricht Treaty to establish the common currency. Senior British Treasury Official (and former staffer to Prime Minister Margaret Thatcher) Sir Nigel Wicks was chairman of the EU’s Monetary Committee for five critical years in the runup to the launch of the euro.

Yet British influence in the European institutions has been eroding for some time. For more than fifteen years, salaries in EU institutions have not been competitive with those in Whitehall and the City of London, and in the past five years, Euroscepticism at home has been so strong that Whitehall stars have not seen much future in making a career in the EU.

Brussels insiders expect there to be some slippage within the EU from key Whitehall practices (impact assessment, cross-service cooperation, stakeholder consultation, etc.) but only over time. Most experts I consulted felt that English would remain the working language within the European institutions as the most comfortable option among northern, southern, and eastern member states. As one official put it, without the British, it would be easier to “speak bad English” in EU meetings, and, more comfortable with fewer native speakers at the table (aside from the Irish), European officials may be able to dispense with interpreters in the working meetings in which decisions get made.

Balance of Power

The UK was only a single member state, but as a large and, until recent years, active member state, it played an important role with Germany and France at the center of EU policymaking. On economic issues, the UK often joined with Germany. On foreign policy issues, it usually sided with the French. Some compare that it a three-legged stool: the British gave stability and pragmatism to French-German compromises.

Without Britain as a member, insiders expect a series of knock-on effects. One view is that Germany’s weight will increase, but its influence may diminish. This would be because although Germany’s relative voting weight will increase with the UK’s departure, it would also take fewer votes to assemble a blocking minority against an initiative. Another effect may be that while Franco-German cooperation is more necessary, it may be more difficult to achieve without the UK as a safety valve and balancing influence. The loss of the British voice and weight also particularly affects the already diminished negotiating power and influence of the countries that do not use the euro.

The Netherlands, which often followed the UK’s lead on budget, economic, and regulatory issues, is making a bid to organize what is sometimes called the new Hanseatic League of northern countries. The so-called “new Hanseatic League” of Austria, Finland, and the Baltic states will focus initially on budget issues (and oppose full EU faith and credit borrowing in particular). Most recently, the Netherlands was a core member of the Frugal Four (later “Five” with the addition of Finland) objecting to allocating EU funding on a grant basis to southern member states to help with coronavirus–related economic hardship. (As noted earlier, the Frugal Five compromised July 20—after a five-day summit—to grant funding to flow to member states, but only €390 billion, rather than the €500 billion originally proposed by France and Germany.

The Visegrad countries (Poland, Hungary, the Czech Republic, and Slovakia) cooperate on several EU issues, but there are significant differences between Poland and Hungary, especially in foreign policy toward Russia. Because Poland is deeply suspicious of France, with Brexit both the Visegrad grouping and the Baltics are expected to gravitate to Berlin. In response, even more than before, the French are taking up the interests of the southern countries, particularly Italy and Spain.

One thing that is not expected is that Italy would replace the UK in balancing the German-French axis. Italian politics are too unstable at home, and insiders suggest Italy’s working style in Brussels (unprepared, inconsistent attendance records) does not allow Italy to pull its weight in EU councils, let alone overachieve. Nevertheless, the prospect of Italian Euroscepticism and economic crisis as a consequence of the coronavirus is a risk to the EU as a whole.

Implications for Transatlantic Relations

Unfortunately for the global community, the final departure of the UK from the EU comes during a grave international health crisis and knock-on economic freefall. In coping with the crisis, the EU may come to miss the UK’s pragmatism and its economic resources (on the other side of the Channel, the UK is struggling to manage the demands of the crisis on its own).

The EU’s commitment to multilateralism and trade liberalization may be hard to advance in a world characterized at present by nationalism and “decoupling” of cross-national supply chains. The difficulty that the EU experienced in getting key Group of 20 members—such as the United States, Russia, and China—to participate in a pledging conference to support the search for a coronavirus vaccine is indicative of the challenge.

Observers have said that for the EU to effectively formulate and carry out effective economic, political and security strategies without the UK as a member of its inner core, the French will need to learn to consult more widely among EU countries before broaching new grandes projets, and the Germans will need to be less obviously complacent. Both countries will also need to navigate political transitions in the coming years. If polls are indicative, then Emmanuel Macron faces a sharp decline in his new party’s political stature, and long-serving Chancellor Angela Merkel has announced that this will be her last term in office.

Americans and Europeans alike (and especially the British) believe that over the decades since the UK became a member, the UK helped build and sustain the U.S.-EU transatlantic relationship. The British explained EU perspectives in Washington and occasionally advocated in Washington for unpopular European views. The UK stood with its European partners in storied disputes over the Siberian Pipeline, banana trade, and Airbus subsidies. In Brussels, Britain often advocated for perspectives it shared with Washington, especially on foreign policy challenges, and, as a member of the Five Eyes, provided intelligence justifications for more-robust EU sanctions and counterterrorism activities.

With Britain out of the EU, it is reasonable to expect the EU to drift in a more dirigiste and mercantilist direction. The EU also may be more susceptible to influences and leverage from Moscow and Beijing. Future transitions in Paris and Berlin, and the outcome of efforts by other EU member states (such as the Netherlands, Spain, and Finland) to play a bigger role in EU policymaking alongside France and Germany, may determine how coherent and united EU policymaking remains. Experts interviewed did not expect any big new integrationist leaps forward in the medium term, even if member states appear to have agreed (exceptionally) to borrowing by Union collectively to fund the € 750 billion coronavirus recovery fund. Even without Britain, the EU may have become too diverse for such steps.

With UK withdrawal from the EU, the United States will need to determine its approach to the EU. Will the mechanisms of the U.S.-EU relationship, which date to 1990, continue? An Atlantic Council of some sort might need to be created, involving the United States, the UK, and the EU, for discussion of political, foreign policy, economic, and regulatory matters that are outside the scope of NATO. This would at least provide a vehicle for engaging the power and influence of the EU in ways compatible with U.S. interests.

The United States supported the formation of the EU and its development over six decades as a bulwark against the type of hyper-nationalism in Europe that led to two world wars and as an approach to providing a large, integrated market for U.S. exports of goods and services and investment. Even without the UK, the EU will remain a vital partner in political, security, and economic affairs in a challenging world.

Ambassador Charles Ries is vice president, International at the RAND Corporation, where he oversees RAND's international offices and relationships, as well as a senior fellow whose research has focused on the economics of development.

Image: Reuters