Understanding Brexit
the red tape of Brussels seems more like a cry in the dark woods than a promise based on economic fundamentals . The UK for now is in a situation to deal with a further deterioration of its current account deficit that either asks for more deprecation of the British pound and / or a courageous productivity policy that eventually turns the UK into a competitive economic space . In any case , the deficit needs to be financed and this requires a steady and sufficient inflow of foreign direct investment . And this again depends on a minimum level of certainty on the side of investors , backed not least by working trade agreements that allows in particular the strong British service industries to succeed abroad .
As things stand , the UK has no chance of achieving an optimum market access to the EU without violating the core of the Brexit referendum , namely the mobility of labor . The most debated
model for an EU – UK agreement is the case of Norway ( De Grauwe 2016 ). Together with such heavy weights as Iceland , Switzerland , and Liechtenstein , Norway forms the group that makes the European Free Trade Association ( EFTA ); at the same time , Norway is a member of the European Economic Area ( EEA ), and it is through this that Norway has access to the EU . As such , Norway has to fully subscribe to the four freedoms of the EU , and this includes of course the free movement of people . Moreover , Norway has to adhere to EU laws and regulations and also to pay into the budget of the EU . Unlike the UK , Norway is not a member of the customs union and thus has the right to negotiate and sign trade agreements with any other country . Obviously , all those factors are either not covered by the Brexit vote or were not part of the pre-referendum considerations . If outer borders want to be controlled , the UK needs to take the WTO path and start
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