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Mar 29, 2017

Make Brexit About Mending, Not Destroying .| Bloomberg Editorial Board - March 29, 2017.

The Editors

Today the U.K. formally serves notice that it’s quitting the European Union. Beyond a doubt, this decision was a grave mistake -- but it’s done, and now Britain and its European partners need to arrange the friendliest possible divorce.
The EU’s initial posture has been anything but friendly, which is understandable. Britain is the defaulting party and shouldn’t expect gratitude. Europe’s leaders, watching anti-EU sentiment gain ground in other countries, are rightly concerned that various EU exit movements will catch on. An easy, let alone triumphant, British departure would send the wrong message.
Europe could inflict severe punishment if it wanted to. In the two years of talks that will now begin, it could simply run out the clock, leaving the U.K. to exit at the end of the talks without a transitional deal. That would badly hurt the British economy.
Yet Britain will still be a big part of the region’s economy, and a slump in the U.K. would hurt the rest of the EU. The City of London supplies financial services to the whole of Europe and beyond. Over time, with Britain no longer fully embedded in the EU system, there’ll be new opportunities for EU-based providers of financial services to prosper. Forcing a sudden halt on London might accelerate that process -- but only at the risk of severely disrupting the EU economy in the meantime.
QuickTake Why Britain Voted to Quit the EU
Smart EU negotiators would aim to widen the exit talks. Focusing exclusively on the terms of dissolution -- on Britain’s financial liabilities to the union, in particular -- makes the project a zero-sum game. Bigger things are at stake, not least Britain’s defense and diplomatic alliances with other EU governments. Both sides should seek to deepen British-EU cooperation in security and international affairs.
Europe’s leaders might also ask themselves whether a punitive approach to Brexit really would quell anti-EU sentiment elsewhere. It might easily do the opposite. The best way to assuage resentment of an arrogant overreaching EU is to be, well, less arrogant and overreaching -- to grant national governments more flexibility, not less, in dealing with such issues as immigration. It’s worth remembering that a little more accommodation of that sort might have stopped Brexit in its tracks.
As for Britain’s posture, Prime Minister Theresa May needs to convey to Europe and to her own voters an understanding that the U.K. cannot have its cake and eat it. The desire to reclaim some sovereignty, especially over control of borders, is not unreasonable. But it comes at a price, and less close economic relations are bound to follow. 
In addition, Britain must accept that it has financial obligations to the union. It should unilaterally grant EU citizens currently living and working in the U.K. permission to remain. And it should stress its desire to deepen its cooperation with the EU in other areas.
Brexit is a terrible mistake, but it doesn’t have to be a catastrophe. The task now is not demolition but construction -- of the closest possible future relationship between the U.K. and the EU.
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at