Three related challenges await the new Prime Minister as he or she responds to last week’s referendum result.
First, the question of when to invoke Article 50. EU leaders want Britain to move quickly. Of course they do. Everyone wants certainty, because certainty breeds stability. In addition, once the clock starts running on Brexit, the rest of the EU holds most of the bargaining cards. Britain wants certainty, too, not least to calm troubled bond and stock markets. But it needs time. Time to choose a new prime minister and time to decide a bargaining stance. Britain holds the cards on timing, because there is no mechanism for the rest of the EU to trigger Brexit negotiations. Only Britain can do that. Once negotiations start, the power shifts.
Second, the question of what to bargain for. As I have written elsewhere, it remains uncertain what exactly the ‘leave’ camp voted for. To be more precise, it is certain that two groups of ‘leavers’ voted for contradictory things. One group wanted to cut immigration, the other to cut regulation and boost free trade. It is unclear what sort of deal with the remaining EU the country and the parliament would support. It will not be possible to sort this out before beginning negotiations. The new Prime Minister will have to get the best deal they can, then try to get through parliament and possibly a second referendum. If they fail, Britain will fall out of the EU completely, causing even greater economic harm.
Finally, there is the bigger picture to think about. Britain will need good relations with the EU and its remaining members after Brexit. It has already generated considerable bad blood, but states forget specific insults over time when their interests converge; look at Franco-US military co-operation thirteen years on from Iraq. Still, the longer Britain delays invoking Article 50, the more damage it does. The harder it drives a bargain in the subsequent negotiations, the more damage it does. It might be in Britain’s short-term interests to delay as long as possible, then push for access to the single market without free movement as Boris Johnson suggests. But if such a stance undermines continental relations further the effort will prove counter-productive over the longer term. David Cameron’s great mistake was adopting a transactional relationship with other EU members, looking to maximise Britain’s immediate advantage at every opportunity rather than trying to build enduring partnerships. When he really wanted something, other EU leaders bargained hard. Small victories, like the 2011 treaty veto, cost more than they were worth in the end. That may be the case here, too.