Brexit options: What potential outcomes remain?

After Theresa May’s defeat Parliament remains fundamentally split over what form of Brexit would be best for Britain.

But how do the options differ?

– Theresa May’s Withdrawal Agreement

Despite the huge defeat the agreement may still be on the table in an amended form as Mrs May seeks cross-party talks for “genuinely negotiable” solutions she can take to Brussels.

From the start of the Brexit process, Mrs May had insisted that she wanted a “bespoke” deal tailored specifically for the UK and not an off-the-shelf model shaped around arrangements offered to other trading partners.

The Withdrawal Agreement reached in November guarantees the rights of UK citizens currently living in the EU27 states and European nationals in Britain, settles the UK’s outstanding liabilities to Brussels budgets for a payment of around £39 billion and takes Britain out of the EU single market and customs union, the common agriculture and fisheries policies and the jurisdiction of the European Court of Justice.

It offers a 21-month transition period after the official Brexit date of March 29 2019 to prepare for the new arrangements.

Alongside this is a Political Declaration agreed by the UK and EU27, setting out a common determination to forge a close future relationship in areas such as trade and security. If this cannot be secured by the end of the transition in December 2020, the period can be extended by a further two years. If the transition concludes without a deal, the so-called “backstop” must be triggered, keeping the whole UK in a customs union with the remaining EU to prevent a hard border in Ireland.

– No deal

If no alternative to Mrs May’s deal is agreed, the default option is for the UK to leave the EU without a deal on March 29. This would mean there would be no transition period, and individuals and businesses would have to adapt immediately to new arrangements.

The UK would leave EU structures such as the single market and customs union and would fall back on World Trade Organisation rules, which require tariffs on many imports and exports.

Experts and businesses have warned that an abrupt withdrawal could cause chaos, with speculation over gridlock at the Channel ports, empty supermarket shelves, a collapse in the value of the pound and even aeroplanes being stopped from flying.

But advocates of no deal say the warnings are exaggerated and the UK would benefit by being able immediately to strike new trade deals around the world.

Brexiteers argue that the UK could save its £39 billion “divorce bill” by leaving without a deal, but this could be challenged by the EU in the courts.

– The ‘Canada option’

The holy grail for some Eurosceptics is an ambitious Canada-style free trade agreement with the EU, removing tariffs from almost all imports and exports of goods, offering co-operation on standards and allowing mutual recognition of professional qualifications.

A Canada-style agreement would allow the UK to leave the EU institutions, end freedom of movement and strike new trade deals elsewhere in the world.

Critics say that the model would severely restrict access to European markets for the UK’s vital service industries – particularly the financial sector. But the option’s fans say services could be included in what they term a Canada-plus-plus-plus deal.

Ministers warn that it would not resolve the backstop problem, as Brussels would still demand the North remains in the EU customs area to avoid a hard border.

– The ‘Norway option’

Some supporters of a “soft Brexit” argue that the UK should take its lead from the members of the European Free Trade Association (Efta) – Iceland, Liechtenstein, Norway and Switzerland – and seek a close relationship with the EU short of full membership.

As a member of the European Economic Area (EEA), Norway enjoys full access to the internal market for most trade in goods, but must implement the bulk of Brussels regulations without having a say in its decisions. It also pays substantial sums into the EU budget.

Switzerland, which is outside the EEA, has a more remote relationship with the EU, based on dozens of bilateral agreements which must be constantly updated. The Swiss are required to follow EU laws in areas which give them access to the single market but make much lower contributions to Brussels budgets. Crucially, the arrangements do not cover services.

Proposals for a “Norway-style” option often envisage a single market and customs union relationship with the EU after Brexit, but the Efta states are actually not part of the customs union. It is far from clear that existing Efta members would accept a UK application to join.

– Remain

If the UK chose to abandon Brexit – either through a second referendum or by simply revoking its Article 50 notice of withdrawal – before March 29, it would retain its membership of the EU under existing terms.

Trade with EU neighbours would continue to be free of tariffs and non-tariff barriers under single market rules, and UK and EU nationals would retain the right to work and settle in one another’s countries. The UK would keep its seat in the EU’s decision-making bodies and hasty arrangements would have to be made for the election of MEPs in May.

The UK would be subject to ECJ rulings and would continue to make contributions to Brussels budgets, currently running at around £9 billion a year net, but the “divorce bill” would no longer be payable. Future trade deals would be made as part of the EU bloc and not bilaterally.

If the UK applied to rejoin after the Article 50 deadline has passed, it would have to go through a lengthy accession process which would almost certainly involve giving up the rebate negotiated by Margaret Thatcher, as well as opt-outs in areas such as justice and home affairs. It could be required to join the Schengen free movement area and the euro as part of the price of readmission.