In 1956, the then chancellor of the exchequer Harold Macmillan commissioned his officials to suggest the best way for Britain to integrate itself into the rapidly growing western European economy. Their plan, soon adopted as official policy, was that Britain and the emerging European Community would both join a new free trade area for industrial goods. In this perfect world, Britain would not be in the EC, would not have to pool any of its sovereignty with the other European powers, would maintain its preferential trade with the Commonwealth, would enjoy frictionless trade with Europe but would still be free to do whatever deals it wanted with the rest of the world. It could, in other words, have its cake and eat it. And why would the other Europeans agree to this? Because, as the Board of Trade explained: “The possibility of UK cooperation would be so welcome [to the Europeans] that we should be able to enter the plan more or less on our own terms.”

If this sounds familiar even to those of us who are not historians of British economic policy in the 1950s, it’s because it is the vision for Brexit that was advertised 60 years later. Plan G, as it was known in 1956, is now Plan A for the true believers: we can have all the benefits of being in the EU without the burdens and compromises of actual membership. And the other Europeans will be so glad that we have condescended to deal with them that we can dictate our own terms.

It didn’t work in 1956, not least because, as Kevin O’Rourke states in his crisp, clear and quietly devastating history, “UK policymakers had been focused on what was required in order to achieve a domestic consensus in Britain. Not surprisingly, they had produced a blueprint that was indeed a very good deal for Britain – but in so doing they had paid insufficient attention to other countries’ interests.” And of course it has not worked since 2016 for precisely the same reasons. Here, as in so much else, we see that if Brexit has a history, it is not a linear one – it loops back not just to an imagined past but to assumptions about Britain’s place in the world that were untenable even in the 1950s.

Brexit's history loops back to assumptions about Britain’s place in the world that were untenable even in the 1950s

O’Rourke is all too aware that, as titles go, A Short History of Brexit is problematic. For one thing, as the defeat of the withdrawal agreement has confirmed, this tale, however it turns out, will not be short. For another, the story is rapidly unfolding: the proofs of the book sent out to reviewers had empty space at the end for last-minute updates – the finished book takes events up to Christmas. It might indeed be questioned whether such a project is worth doing while the outcome is so uncertain. But O’Rourke’s book provides a bracing and absorbing answer. As he puts it towards the end, Brexit has already been “a hugely informative, if costly, civics lesson for the people of Britain, Ireland, and the rest of Europe” and he is superbly well fitted to draw out that lesson for the general reader.

Kevin Hjortshøj O’Rourke, to give him his full name, has been Chichele professor of economic history at Oxford since 2011. His father was Ireland’s permanent representative to the EU in the 1980s, his mother is Danish, he was born in Switzerland and is a municipal councillor in the small French village of Saint-Pierre-d’Entremont. This mixture of expertise and life experience gives him both a sure grasp of the fine details and a wider human perspective.

He is excellent on the realities of trade regimes: if you want the truth about what World Trade Organisation rules actually mean, or why hard borders cannot be avoided even if post-Brexit Britain merely ends up with different rules on VAT, he is a reliable guide. Some of these “civics lesson” aspects of O’Rourke’s book have an urgency that is shaped by the sheer mendacity of the Brexiters. It should not, for example, be a great revelation that freedom of movement isn’t a cunning trap devised after an innocent Britain had been lured into what it thought was merely a trading bloc: it is right there in the 1957 treaty of Rome. Yet it matters that such things are laid out with such clarity.

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O’Rourke is also acute on the very different ways in which first world war centenaries were commemorated in Britain and France. One memo to David Cameron as prime minister issued instructions that “we must ensure that our commemoration does not give any support to the myth that European integration was the result of the two World Wars”. By contrast, the French prime minister Édouard Philippe, speaking in 2017 at the armistice site at Compiègne, did exactly that, evoking the idea of “a Europe that reminds us of the eternal values that unite us, and the disasters we mourn”.

While O’Rourke’s cool account of the Brexit negotiations is valuable, it is his overview that is most important. He explains why the habit of setting the claims of Europe against those of the nation state is simply wrong. The European Union was the answer to a very real and urgent question: how can we enjoy the economic benefits of free trade while limiting the known ability of free trade to undermine national governments and the welfare states they had put in place? The dilemma, as he so neatly summarises it, is that “economic prosperity required trade but political stability required welfare states. In order to achieve both prosperity and stability a free trade area was not enough: you needed European integration to set a common regulatory framework so as to prevent destructive races to the bottom. In this way Europe would come to the rescue of the European nation state.”

Perhaps this thought might be taken a little further: if the EU was about rescuing the nation state, might the great structural problem of Britain’s attitudes to it be precisely that the UK is not a nation state? It was, in the early days of European postwar unification, still an imperial power, and its official suspicion of the idea of a continental customs union was shaped by the belief that it could and should continue to prioritise its trade with its soon-to-be-former colonies. (The excruciating contradictions that this involved are perfectly captured by the conclusion of a British expert committee appointed in 1947: “A continental customs union had little economically in its favour other than the damage which would be caused by being excluded from it.”) And of course, the UK contains four different nations that would come over time to take very different views both of the nature of the welfare state and of the relevance of Europe to their sense of identity.

The great limitation of historians is generally that they know too much. They cannot share the great ignorance of the people they are writing about: the condition, in which we are all still held after the stalemate at Westminster, of not knowing how it is all going to turn out. Though it is scant consolation for the pain it inflicts, Brexit does rather poignantly bring together the knowledge provided by a long-term historical perspective with the sheer terrifying unknowability of the outcome. O’Rourke may not have known the result of the vote on the withdrawal agreement, but his guess turns out to be a well-educated one. He predicts, accurately, that alongside that deal, “the only logical alternatives would appear to be no deal and no Brexit”. And he points to a hard fact that some of those suggesting other plans at this very late stage seem not to grasp: “The Labour party hopes that a general election might in such circumstances return it to power, but even if that happened the country would still face the same three alternatives; the ‘Norway plus’ option requires leaving on the basis of the existing Withdrawal Agreement.” As O’Rourke acknowledges: “This is what history feels like when it is being made.” It feels simultaneously like reliving the past and forgetting everything that might have been learned from it.

• A Short History of Brexit: A Pelican Book by Kevin O’Rourke is published by Pelican (RRP £20). To order a copy for £17.60, go to guardianbookshop.com or call 0330 333 6846. Free UK p&p over £15, online orders only. Phone orders min. p&p of £1.99.