De Gaulle, Gaitskell and the single market—to understand Britain’s relationship with Europe, consider this historic counterfactual

In January 1963 French President Charles de Gaulle vetoed Harold Macmillan’s (unenthusiastic) application to join the European Economic Community: the UK would be too disruptive. In the same month the Leader of the Labour Party, Hugh Gaitskell, was struck down by a very rare, fatal case of Lupus, aged 56. The effect of the first event was to delay UK accession to the EEC by about eight years: the second event has arguably had an even more profound effect on subsequent history.

In continued good health, Gaitskell could have put UK-EEC relations on a path that would have led Britain to address the trade-offs between national sovereignty and economic integration much earlier and in a much cooler political climate than now, so facilitating their expeditious resolution. To understand where Britain’s relationship with Europe ended up this counterfactual world deserves some exploration.

Gaitskell opposed MacMillan’s EEC application, to the delight of most of his party. He was attracted by the trade liberalisation aspects of the Common Market, but fiercely opposed both to the common agricultural policy and customs union (“one of the most devastating pieces of protectionism ever invented”) and to the supra-nationalism of the Schuman/Monnet project (“the end of a thousand years of history”).

Given his experience and standing, Gaitskell would likely have won the 1964 general election much more comfortably than his successor, Harold Wilson. In prospect then would have been a two-term Labour government running to around 1973-4. There would likely have been no second (instantly blocked and shelved) application to join the EEC in 1967, in distressed economic conditions that were soon over. Consequently, in the “good health” counterfactual, that blocked application would not have been shelf-ready for re-opening later, from 1969 on, once de Gaulle had resigned.

The 1973/4 end date of this period is important. In the 1950s and 1960s France and Germany achieved significantly higher economic growth rates than Britain. The continentals appeared to have discovered something new and powerful in economic policy and the obvious, observable correlate of the later years of the trente glorieuses and the Wirtschaftwunder was the common market. However, the golden age of European growth came to an abrupt end in the aftermath of the 1973 global oil price shock.

Thereafter the cross-channel comparisons changed sharply: the later 1970s and early 1980s were labelled years of “euro-pessimism” and “euro-gloom.” Euro-enthusiastic Edward Heath had struggled to find a majority for the negotiated accession of the UK that had begun in 1969: starting three or four years later it would have been a much tougher, and probably impossible, task. Britain would have remained in the European Free Trade Association (EFTA) but for the time being not gone further.

But the counterfactual is worth pressing on with. The EEC’s eventual response to its deteriorating performance was the “Internal Market Programme” (IMP), set out in its Cockfield White Paper of 1985. While a customs union for goods had existed since the late 1950s, border posts remained plentiful across Europe due to divergences between national regulations. These sorts of factors created substantial non-tariff barriers to trade between member states. The aim of the IMP was to reduce segmentation between national markets via a programme of regulatory harmonisation.

The prospects held out by the IMP caused a major headache for neighbouring non-EU states, illustrated by an example of Swedish and French firms competing to sell to customers in Germany. The CU gave a tariff advantage to the French, but the great bulk of that advantage could be, and was, offset by a Swedish-EU free trade agreement. Now, however, via the IMP, the EEC was moving to address non-tariff barriers, including in services, and there was no general economic instrument (like an FTA in goods) available to offset the effects. Businesses in the EU’s near neighbours therefore faced being placed at a significant competitive disadvantage in their major export markets, unless their governments could gain influence over the development and evolution of the market rule-books so as, for example, to bargain compromises and protect against EEC business lobbies that might seek to tilt EEC regulations against them.

So serious were the perceived risks that individual EFTA states quickly began to start considering applications to join the EEC, but the Commission was initially discouraging: it did not want to deal with multiple accession applications when its flagship legislative programme was in the early stages of its development.

The European Commission adopted a can-kicking strategy in relation to EEC membership, but with a distinctive and innovative twist. A new structure of economic cooperation was proposed that would allow Sweden et al to participate in the governance of the single market, i.e. to have influence over its rule-making, without being members of the EEC. This was the European Economic Area (EEA), so named by Margaret Thatcher. Its development was a masterclass in optimising trade-offs between national sovereignty and economic integration, which was done by introducing a “two pillar” market governance structure, one for the EFTA States relying on inter-governmental principles, the other on the supra-national structure of the EEC. Each and every EFTA state signed up to the EEA Agreement, although, in the event, Switzerland did not ever actually ratify it.

In the counterfactual, having not acceded to the EEC the UK would have been an independent, sovereign state participating in EFTA. It would have been at the negotiating table for the EEA, likely alongside eight other EFTA states, augmented by the Republic of Ireland. The question is: what would have been the UK’s attitude to the EEA?

The answer would in all probability have been the same as that actually given by the EFTA States, i.e. positive. For a non-EU member, the EEA was close to a British dream-version of European economic cooperation: an enhanced FTA, comprehensively extended into services, without subjection to Schuman/Monnet supra-national governance, without the common agricultural policy, without the common fisheries policy, without the customs union, and without restrictions on an independent commercial policy (thus allowing the UK to strike FTAs with other countries of its choosing). It is the kind of arrangement that Macmillan originally sought, that Gaitskell had indicated he could support, and that Thatcher wholeheartedly endorsed.

The EEA is, then, the broad positioning within the structure of European economic cooperation that the UK would likely have occupied had it never joined the EEC, but actual events have proved stranger than the counterfactual fiction. Almost the first major decision that Theresa May made on taking office was to put a red-line through the EEA, thereby discarding 30 years of institutional development and accumulated experience without pause for reflection or assessment, which, on the face of it, is more Jacobin than Burkean. Although one of their number (Owen Paterson) had earlier said that “only a madman would actually leave the [single] market,” hard Brexiteers consolidated around the red-line within a couple of months. In doing so they have rendered Brexit negotiations much more complex and difficult than they needed be, thereby putting Brexit, their own brainchild, at severe risk.