Making matters worse, the promise of a long transition could delay the shift in public opinion needed to reverse Brexit before it is too late. After March 28, 2019, the UK will be officially out of the EU, where economic growth has already started to overtake that of Britain. If it ever wants to be readmitted, it will have to settle for far less attractive terms than what it enjoys today. Not only would it no longer receive budget rebates or special treatment on social regulations; it might even be forced to join the euro.
Even the 48% of British voters who voted “Remain” might reject such humiliating terms. Britain would thus be stuck in limbo – like Norway, but without the oil wealth or social cohesion. As the Labour Party’s trade spokesman has aptly put it, a semi-permanent transition period based on the “Norway model” would turn Britain into a “vassal state.” It would still pay large sums into the EU budget and adhere to EU laws, but it would have no say over how that money is spent or how those laws are made.
In the months ahead, the British public may start to foresee this humiliating endgame. The Norway model will satisfy neither Britain’s elderly, provincial Europhobes, nor the young, urban voters who want to preserve the rights of EU citizenship that they have taken for granted all their lives.
With this depressing prospect setting in, British voters could change their minds about Brexit before their leaders go through with it. But for such a Damascene conversion to happen, the country would have to experience a political or economic crisis large enough to shake public opinion out of its fatalistic complacency. As things stand, Britons have been emulating that beloved national slogan, “Keep calm and carry on.” Before things can get better for Britain, they will probably have to get much worse.
Anatole Kaletsky is chief economist and co-chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of "Capitalism 4.0, The Birth of a New Economy," which anticipated many of the post-crisis transformations of the global economy.