UK facing economic wilderness after Brexit

The UK could find itself consigned to the economic wilderness if voters decide to leave the EU, MSPs were told today.

Picture: TSPL

The prospect of Britain joining the alternative European Free Trade Agreement (EFTA) met with a frosty reception from Norwegian Government officials today who warned that it may lead to “conflicting interests” with countries who are currently members.

But Holyrood’s European Affairs committee was also told today that a solution could be found to David Cameron’s demands for a new deal on EU membership to pave the way for the Government to support staying in.

An in-out referendum on the UK’s membership of the EU is likely to be staged this Summer if Mr Cameron can secure a deal on EU reform including restrictions on migrants’ rights to benefits and clawing back sovereignty from Brussels.

Knut Hermansen, Minister Counsellor of the Norwegian Mission to the EU in Brussels told MSPs today that UK involvement would “change the power structure within EFTA or the EEA (European Economic Agreement).”

Mr Hermansen said these have been a “solid platform for cooperation” with EU countries on economic issues.

He added: “We have a pragmatic approach within this operation due to the fact that Norway, Iceland and Liechtenstein are all smaller nations and our interests do not have so much impact on the EU internal market.

“If the UK should decide to join the EEA or EFTA then, of course there would be more interest in a large country coming in and potentially I think it would be possible to have a lot of conflicting interests.

“So I think it might be somewhat difficult to find pragmatic solutions in future if that was to be the case.”

Switzerland is also a member of EFTA and has formalised its relationship with the EU through a series of bi-lateral agreements, without joning the EEA.

But Andreas Auer, Emeritus Professor at the Universities of Zurich and Geneva said Switzerland has considered joining the EEA - but even this met with concern about the impact on the existing balance of power.

He said: “The answers we got from the Norwegian side was that the Norwegians were not extremely keen on Switzerland joining the EEA - that’s what we heard.

“We would not be particularly welcome because it changes the power structure within the EEA. And probably with UK joining the EEA it would be even worse.”