U.K. Mustn’t Get Competitive Edge After Brexit, Danish PM Says

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Denmark’s prime minister, Lars Loekke Rasmussen, urged his European Union colleagues to ensure that the U.K. doesn’t end up with a competitive edge when it leaves the bloc.

“We need to be extremely careful that the side that leaves doesn’t get particular competitive advantages on its way out,” Rasmussen, 52, told Bloomberg after speaking at an event outside Copenhagen on Thursday. “We all want a peaceful divorce, but when you agree to part ways -- and in this situation, only one side wants to part ways -- then we need to protect our own interests first.”

The ultimate aim should be to keep the single market intact and to keep Britain as close to the EU as possible, Rasmussen said.

The disconnect between what the U.K. wants and what the EU is willing to give appears to be growing wider by the day. Britain’s goal of somehow limiting the free movement of labor without losing access to the single market looks increasingly far fetched. Tomas Prouza, the Czech state secretary for EU affairs, last week went as far as to call the U.K.’s current proposals “completely unrealistic.”

There’s reason to fear the whole process of extracting Britain from the EU could last up to half a decade, according to the chief executive officer of Nordea Bank AB, Casper von Koskull. In an interview with broadcaster YLE TV1 on Saturday, he ventured that the outcome of the referendum probably “came as a bit of a surprise for the Brits themselves.” But now that the decision has been made, “it may well be that this will be a process that lasts three, four or five years,” he said.

The only country ever to have exited the EU to date is Greenland, which voted to leave in 1982 but didn’t get out until 1985. In an interview last month, the Danish foreign minister who oversaw that process, Uffe Ellemann-Jensen, suggested it is illusory to imagine that it might take the U.K. less than the three years it took Greenland.

“Negotiating Greenland’s exit was a fairly simple task that resulted in a relatively simple and easy to understand protocol,” Ellemann-Jensen said in August. “That took three years. Britain will take much longer. It’s impossible to say how long.”

Tax Competition

Meanwhile, other nations are also voicing concerns over possible efforts by Britain to carve out a competitive niche. In Sweden, Prime Minister Stefan Loefven has warned the U.K. against pursuing an “aggressive” agenda that includes corporate tax cuts. In an interview with Bloomberg last month, Loefven said that such policies would only sour relations between Britain and the EU.

For more on Britain’s discussion of tax rates, click here.

Denmark’s finance minister, Claus Hjort Frederiksen, has suggested the U.K. will need to continue contributing toward the EU’s budget even after it exits the bloc. “It’s not just as if everything can continue, minus Britain,” he said in an interview last month. “The talks that lie ahead will touch on the fact that Britain will inherit a lot of things that are already under way, and they can’t just turn their backs on those costs.”

Still, Denmark has signaled it may use the U.K.’s exit from the EU as an opportunity to press its own agenda. In particular, Rasmussen’s government is keen to restrict access to the country’s costly welfare system for EU migrants.

EU leaders are set to discuss Brexit again during a summit in Bratislava, Slovakia, on Sept. 16. It will be the first such event since the U.K. joined the bloc in 1973 at which the country won’t be represented.

(Adds Danish finance minister comment.)
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