A shift to re-focus on the benefits of the single market for trade (as Britain always advocated), rather than grand ambitions for political union was long overdue.



However, the EU was also caught out because its centralised rule-based approach was found too inflexible to cope with the aftermath of the 2007/8 financial crisis. Greater flexibility is required to accommodate the needs and concerns of all 27 nations, many of which are still far from convergence. But what would more flexible approaches look like?



EU migration without limit was not the only issue that drove the Brexit vote, but without it there would never have been a majority vote for leave. Yet simple approaches could have allowed the UK (and other governments that wished to) to lean against migration, without ending freedom of movement. If national governments were allowed to descriminate by charging employers (but not the employees themselves) a surcharge for employing foreign nationals, they would be able to adjust the rate for such a migrant employment tax as required to balance demand. Contrary to the populist image of Eastern European workers invading our country to benefit from the NHS, most EU migrants were actively recruited to come by British firms who found they were cheaper, more compliant, and better skilled than British workers. By adding a significant tax premium to every foreign worker the UK could have changed this dynamic and restricted migration to sustainable levels. Yet this would not limit freedom of movement for any individual, neither would it be unfair because migrants could be legally guaranteed the same rate of pay as domestic workers. Only the employers would be forced to pay more.



Similarly, in trade and social policy, the imposition of central rules from Brussels in domestic markets has come to be seen as intrusive and limiting to local innovation. What if a poor community decides to restrict its public spending to local businesses in breach of EU competition law, or wants to subsidise local technology start-ups with public money. An more voluntary solution is already at hand with the idea of "passporting" which was first developed to allow banks in London to trade in the Euro. A more ambitious idea would be to develop an agreed set of EU wide rules for trade and commerce, which companies could opt to submit and be audited against in order to gain an EU trade passport. This would allow them to trade across all EU member nations without tarrifs or red tape, provided they comply with all requirements. These would not only include consumer protection and safety standards, but also committments not to use labour anywhere in the World below an agreed minimum rate, and to openly share country by country reporting and agree to EU fair tax rules. Companies that didn't wish to apply for an EU passport would continue to trade under existing WTO rules, and governments could set their own rules within local markets, provided they did not impinge on the right of "passport" businesses to trade in their markets.



If it is to survive, the EU must become less obsessed with its principles, and more pragmatic in developing systems that still allow the freedom to innovate and prosper to all its member countries. If it succeeds there is a much bigger prize to be had. These more flexible systems could in time (long after Trump) become the basis of a bigger Global Parnership including China, EU and United States which would for the first time establish a proper rule based system for Global trade.