Swiss Tony lays a trail

Target 2025 for London and Bern

Do you remember the short-lived fuss after the Sunday Times reported that EU/UK relations would move “towards a Swiss-style relationship over the next decade”?

Three reliable reporters were, it seems, victims of "freelancing" ("my money's on Jeremy Hunt"), according to editor/courtier Fraser Nelson. Cue outrage from the governing party’s People’s Front of Judea wing and a Rishi Sunak “under my leadership” pledge. The UK “will not pursue any relationship with Europe that relies on alignment with EU laws,” vowed the country’s latest interim prime minister.

Of course, that’s exactly what his government is doing. Since they took back control, the last three administrations have exercised minimal regulatory divergence from the EU or the wider European Economic Area (EEA) single market. Boris Johnson and Liz Truss never got around to it while Sunak has clocked that restoring business confidence depends on not just stabilising public debt but on healing the most obvious of Brexit’s open wounds. Hence the freelancing by his chancellor.

But Hunt’s attempt to dress up the status quo as a strategy was always going to fail for three reasons. First, the Conservative party won’t wear it. Second, the EU won’t offer a “Swiss-style” deal to the UK since it dislikes the economic relationship it has with Switzerland so much that negotiations to overhaul it have been underway for eight years. Third, and most importantly, a regulatory-alignment strategy will only work if it is dynamic - updating automatically as rules change - and if the UK is no longer committed even to theoretical divergence.

Sunak can make no such pledge but his successor can, and this is where things are already starting to move behind the scenes. It’s going to be a long game - starting in 2025 and facing its first popular test at the 2028-29 election - but preparations are already underway. As former Conservative leader William Hague wrote in the wake of the Sunday Times story: “That would be a long enough period for the electorate to come to a judgment and, if that judgment were to be that Brexit had been a serious mistake, for materially closer links with the EU to become a very popular cause".

Where better to begin this behind-the-scenes “Swiss-style” story than in Switzerland?

How not to do it

As word reached the Swiss that the British intended to follow in their footsteps, local journalist Marc Leutenegger penned an open letter entitled “Dear Brits, bury the dream of the Swiss model!” He’s right.

After the Swiss underwhelmingly rejected¹ membership of the EEA in a referendum 30 years ago, Bern and Brussels spent seven years negotiating seven bilateral agreements on free movement, technical barriers to trade, public procurement, agriculture, air and land transport, and research cooperation. A follow-up round of sectoral agreements completed in 2004 brought Switzerland into the Schengen area, imposed the EU's savings-tax regime, and exacted a Swiss budgetary contribution to the union's poorest countries.

The “Swiss-style relationship” is, therefore, a patchwork of 120 agreements pieced together over three decades and subject to a “guillotine” clause - meaning that, if one bilateral deal collapses, the overall agreement is voided. Swiss governments have to accept measures they hate to win concessions they like and the EU has to oversee an excessively complex, time-sucking and legally uncertain agreement. As a result, the two sides opened renegotiations in 2014. The Swiss wanted exemptions but also new accords on access to the EU’s electricity market, food security, research, and healthcare while the union wants a single framework agreement. After seven years of talks, in May 2021, the Swiss pulled out.

This got a lot of attention at the time. What got no attention outside Switzerland was that, on 23 November – three days after Swiss-stylegate broke – Bern’s negotiators left a sixth round of exploratory talks with the EU and declared that real progress had been made. For the first time in 18 months, the two sides could see grounds to reopen negotiations. Thanks to Russia’s full-scale invasion of Ukraine, a lot has changed in Europe since May 2021 and that includes Swiss public opinion. A gfs.bern poll conducted on 6-17 October found that a narrow majority 48/45% majority now disagreed with the government’s decision to pull out of the negotiations. More strikingly, 70% now claim to favour dropping the renegotiations altogether and just joining the EEA with Norway, Iceland and neighbouring Liechtenstein.

While the mood music has audibly changed, nothing substantive will happen until 2025. A Swiss election next autumn will be followed by European Parliament elections and a power transition in Brussels a year later but the preparatory work is underway for a more radical renegotiation starting a little over two years from now. And this is sure to coincide with the initiation of talks to convince Ukraine, Moldova, Georgia and the Balkan candidates that their future is inside the union.

Starmer’s roadmap

It will also coincide with the first review of the EU/UK trade and cooperation agreement (TCA) under Sunak’s successor: Labour leader Keir Starmer. As my old home city Chester confirmed this week, the polls aren’t lying when they give Labour a consistent 20-point lead. The Tories will not form the next government.

The polls tell us something else: public opinion on Brexit has turned. A YouGov poll conducted on 22-23 November found 52% of respondents now believe withdrawal from the EU was wrong and 34% right. Wrong now leads among all age groups under 65, has a 21-point advantage among women, as well as 12- and 15-point leads in the north and Midlands/Wales. Asked what they thought of “Swiss-style” regulatory alignment with the EU, 81% of respondents to an Omnisis survey on 23-24 November were in favour while 63% wanted a return to the EEA.

This isn’t enough to persuade Starmer to apply to return to the EEA; he rightly worries that public acceptance of free movement is soft. But it does provide a mandate to repair the economic damage caused by Johnson’s divergence-enabling Brexit. In a July speech, Starmer gave us the bones of Labour’s “Make Brexit Work” plan. Containing little more than a commitment not to rejoin the EEA, the plan had enough blank space to pacify the party’s Continuity Remain faction.

On taking office in 2024-25, Starmer’s focus would be on the most immediate repairs and one strategic proposal. Regarding repairs, he says he would request a sanitary and phytosanitary (SPS) agreement to address part of the Northern Ireland problem but encompassing the whole UK. He would also seek mutual recognition of professional qualifications to address immediate labour bottlenecks in services and full participation in the Horizon Europe research programme. To capitalise on the UK’s rebirth as a key European strategic player since 24/2, Starmer would press for new continental “security arrangements” and resumed data- and intelligence-sharing.

Since that speech and throughout the party conference in October, the Labour frontbench has stuck rigidly to those talking points. Work on adding flesh to the bones of the speech was outsourced to the only Labour leader to have won three elections - a man brought in from the cold this year by Starmer. In Fixing Brexit - published this week by the Tony Blair Institute for Global Change - Anton Spisak sets out a “sequenced package” for the British government, starting with trust-rebuilding, the development of a coherent internal strategy, and culminating in a renegotiation of the TCA in 2025. Building on Starmer’s triage, the TBIGC advocates embedding the government’s “level-playing field” commitments to high food, labour and environmental standards in domestic legislation to back up its reassurance to the EU against regulatory divergence. And dynamic regulatory alignment with “appropriate governance structures to ensure compliance” would not be off the table.

Blair would love to go further and quicker but, of all politicians, he understands that taking public opinion on a journey back to pre-2016 Europe will be “like a man carrying a priceless Ming vase across a highly polished floor”². His and Starmer’s great unexpected advantage is that Vladimir Putin has changed the terms of the game. When the negotiations start, the UK will be part of a continent-wide convergence.

1. By 50.3% with the German- and Italian-speaking cantons opposed and the French speakers in favour.

2. Quote from Roy Jenkins about Blair’s view of his electoral chances in 1997 despite having a colossal polling lead.