"Winning was easy, young man. Governing's harder"
Hamilton, written by Lin-Manuel Miranda
When he decided to hold the EU referendum, David Cameron hoped for a comfortable victory. Even if it turned out to be close, the June date meant that the long summer holidays, dominated by the football and the Olympics, would have allowed any passions generated by the campaign to die down. By the time parliament restarted in September, and markets resumed major activity, the referendum would seem like a distant memory, leaving him free to focus on building a "legacy". Of course, he didn't have any plan for what would happen in the event of defeat, as shown by his resignation on the morning after the voter.
Naturally, David Cameron wasn't the only one who was hit for six by the result. Indeed, it's become clear that many of the Leave campaign didn't have a clue about what to do in the event of a victory. Days after the vote, Boris Johnson attracted derision for a newspaper column that implied that UK would retain the status quo apart from ditching most European regulations. So what are the options – and how much political support do they have?
This would be along the lines of the European Economic Area, the wider grouping covering the EU, as well as Norway, Iceland and Lichtenstein (Switzerland has a special status). This would allow British companies full access to the Single Market (vital for both manufacturing and the City). Unlike the status quo, it would cut the UK contribution to the EU budget, allow greater control over agriculture and fisheries and permit trade deal with third parties. However, the UK would still have to accept freedom of movement and EU regulations, while having no control over EU decision making.
Since the majority of MPs, including Theresa May, the favourite for the Conservative leadership, supported Remain, a Norway-style deal would seem to command the most support across the political spectrum. Despite its flaws, it would also retain most of the immediate benefits while allowing the UK to ditch some of the unpopular areas, like agricultural and fisheries policies. Polls suggest that enough leavers support it to give it a majority. Indeed, a YouGov poll a fortnight before the vote showed that 57% of voters would support this, with only 24% opposing it.
So, what's the catch? The one big problem is that EEA membership involves accepting freedom of movement. Since immigration was at the heart of the Leave's campaign, opponents of any deal could cry foul. In her pitch for the Conservative Party leadership, Theresa May promised to introduce controls on freedom of movement. While an EEA style deal could probably win a second referendum, few politicians want to run the risk, at least not immediately. This means that the current consensus is "Norway-Plus" – EEA membership plus controls over migration. Whether Europe is willing to offer this deal is another issue.
A looser trade deal with the EU
A deal such as the one proposed with Canada would remove most industrial tariffs as well as restrictions on some services. It would also remove the need for budget contributions and freedom of movement. However, manufacturers would still suffer since European countries would be able to indirect discriminate against them and there would be restrictions on the amount of third-party components that they would be able to use. Many service sector firms, especially those in banking and finance, would also suffer restrictions, making Britain a far less attractive destination for investment.
"WTO Rules": the UK to be treated like any other country
If Britain leaves the EU without a deal in place it would rely on global trade rules and negotiate deals with other countries and trade blocs. While this would give the UK most flexibility, it would also create the largest short and medium term disruption as British firms and banks were shut out of European markets. Indeed, the LSE Centre for Economic Performance estimates that the reductions in trade in this scenario could reduce GDP levels by over 3%, even taking into account the end of contributions to the EU budget.