Investments  

Russell Taylor: Investors need to rethink Brexit strategies

Rules of the game

This was not because of malice or political enmity, said Mr O’Neill, but because “almost every conceivable community policy is the result of a conflict of interest between members, and has embedded in it features representing a compromise between the interests”. If it were to be opened up just because the British had a strong argument, the whole laborious compromise would fall apart.

Article continues after advert

As Mr O’Neill reported, the UK was faced with the “acquis communautaire”, or accumulated laws of the EU, and told to swallow them whole. Since then, of course, the ‘acquis’ has expanded, as EU membership has grown, but this body of law is the very basis of all the deals, negotiations and compromises made between the parties. It cannot be unravelled, because to so would begin the disintegration of the EU itself.

Britain has never understood this, because it has never accepted that the second world war diminished the power and influence of all European countries, especially that of the UK itself. The EU was a political act, thought up during the war by Monnet and Schuman, to bring together old enemies for future security and strength.

Rigidity and flexibility

As such, the EU is not a negotiating body – as another country would be – but a legal treaty. So the EU is a legal construct, based on Roman law, or the judgments of emperors given over the many centuries of the empire’s existence. These were codified by emperor Justinian in the mid 500s AD, then adopted by the Catholic Church as the basis of ecclesiastical and lay law, and finally updated and forced on all continental European countries by Napoleon.

But the British mindset is very different. Based on Anglo-Saxon family law, common law practice is rather more flexible than Roman law or the Napoleonic code. The differences are summed up in a phrase once popular among bankers: on the continent, what is not allowed is forbidden, while in London, what is not forbidden is allowed.

Unity before prosperity

Unity, and not prosperity, is the key issue of EU negotiations. So the 27 EU members are determined, first, that there can be no cherry-picking by the British and, second, that whatever deal the British want has to be deliverable, or fit within an existing accepted pattern. This could be either of the Canadian or the European Economic Area type – the latter being the Norwegian deal.

Both country and political parties are split on what Britain wants, but the prime minister’s elegantly crafted compromise will not satisfy the EU. No one knows what will happen when Britain crashes out of the EU, but it might well bring about high inflation as the country faces up to the costs of the (still secret) promises made to the car manufacturers.