We're going with #JCMSBrexit for this
A welcome from Annual Review editor @RGuerrina 
.@simonjhix opens by setting out need to consider interplay of economics and politcs, which pull in v.different directions
Points to basic FTA as most likely outcome
The basic options range from WTO to EEA
Worth noting that EEA option means a changed EEA: probably development of new mechanisms and powers
The economics point to assorted degrees of cost, varying by hardness
Mention of @jdportes figures on additional borrowing
Likewise, trade effects exist, although v.asymmetric against UK. This is a good pointer to type of trade deal that ensues
Importantly, trade is differentiated between goods and services
The result is that likely to be pressure on EU side for goods deal, less so for services
Costs to EU of hard Brexit unevenly spread: for many it'd be 'rounding errors'. Plus some financial business will move from London (though not all, as other centres not yet trusted to replace it)
Thus, several options open for financial services
This is likely to be at lower end, given problems of trust and sovereignty
Moving to politics, two main UK narratives, articulating very different visions of future relationship w EU and rest of world
A degree of split between elite and public views here. Interesting how ppl like Gove have started to try and move debate on immigration aspect
Mention @CommonsForeign rpt on vassal state problem, which will remain prominent in public debate
BES data shows Brexit voters aren't liberals, on social issues. More mixed on economics
Suggests some v.different groups of Leave voters co-exist
How you cut data, all groups more likely to reduce immigration, from any source, while also appalled by HMG's treatment of them.
On EU side, no cherry-picking has 2 elements: fear of contagion w/in EU, and impacts on other FTAs. Keep it simple to avoid this.
Mutual recognition also a big problem, as can't continue post-Brexit
Mutual recognition also a big problem, as can't continue post-Brexit
Contagion fears are more contained, but still present
However, EU is probably overly worried, as UK is an outlier on degree of trade integration w rest of EU, both on goods and services
Final political aspect are ratification hurdles. Note these are much bigger in future relationship. 'Good luck with that Irish referendum'...
And so to some game theory. Preferences aren't single peaked
Which produces the following grid and equilibrium
To get to EEA, would need major shift in UK debate. To have FTA+, EU wild have to make big concessions
Beyond immediate deal, likely to see shame effect as in Scandinavia: opposition to EU increases more for non-members than for those that joined. Driven by visibility of costs
A summary
And we're done. A paper will be on @JCMS_EU AR website in coming month
Some points from Q&A.
Transition can't be obviously extended beyond 2020, and UK don't want extension either. Basic FTA can be created very simply, so that further pushes towards that outcome
Transition can't be obviously extended beyond 2020, and UK don't want extension either. Basic FTA can be created very simply, so that further pushes towards that outcome
V.difficult to imagine any way Brexit doesn't happen. Probably no Parlia May for 2nd ref'm, and little expectation in EU27. 'Can't kiss and make up'
Also important to remember it's not the end of the world. Hope that end w similar real as CDA/US
Also important to remember it's not the end of the world. Hope that end w similar real as CDA/US
Pressure to create two-tier EU will be strongly resisted by those who fear being in second tier. That points to a relatively unchanged EU
Some border w IE is likely, so HMG shld start admitting this, so it can design necessary infrastructure. If LAB swing behind final deal, then DUP support becomes less critical
Convergence on internal and external security means UK threats to crash out on this don't look credible
UK has never understood EU is a political system, not just an International Organisation: a space w give and take on issues
Sweden probably only other state that might leave: similar attitudes and soon to have another model of how life outside EU might look
70% of UK economy is services, so customs union is a bit of a red herring, esp as CON and LAB aren't so far apart on policy
Many UK politicians have an e20C view of free trade. Now about integrated chains, not exchange of goods
Fudging ECJ is easier than fudging FoM
And we're done. Thanks to @simonjhix @JCMS_EU @SurreyPolitics And @UKParliament for hosting us.
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