Does the UK Still Have a ‘Norway Option’?

For businesses looking to go global, it’s fair to say Brexit has put a few spanners in the works. Expanding your business abroad requires certainty – and that’s the one thing that back-and-forth, tense Brexit negotiations have made impossible. Amid the rumours and speculation has been mention of a Norway option – but the chances of this happening, and what it would mean for companies going international, hasn’t yet been widely communicated.

Norway has made it very clear it doesn’t want to be a member of the European Union, and has rejected membership twice before, in referendums in 1972 and 1994. Nevertheless, it has always prioritised having a close relationship with the EU; as close as it possibly could without being a member – and the Norway model has subsequently been touted as an ideal for non-member states, including the outgoing UK. But there are disagreements over whether the Norway model is still a viable option for the UK following Brexit, and what the impacts of such an outcome would be for businesses operating from the UK.

Norway is a member of the European Economic Area (EEA), which is an extension of the EU’s internal market of 28 member states and members of the European Free Trade Association (EFTA), which also includes Norway.

If the UK decides to join the EEA following Brexit, it would first need to join the EFTA. These memberships would give the UK access to the single market, as well as some EU programmes, but at a cost. The UK would have to make a financial contribution; however, it would free the UK from other burdens that come with being a member of the EU.

The EEA requires members to accept the core principles of its internal market, including the free movement of people; Norway has a much higher immigration rate than the UK. The member state must also comply with rules around employment, the environment and consumer protection, which all relate to the single market.

While EEA-EFTA countries must comply with EU legislation in the aforementioned areas, they don’t have a role in the EU’s decision-making, nor can they vote on any rules. And they are not represented in the European parliament. Some say this is the most problematic characteristic of the Norway model.

Prime minister Theresa May has repeatedly rejected the Norway option, due to the fact it would mean staying in the single market – despite the tariff-free access this allows, and which currently accounts for a significant chunk of the UK’s economy. It also means complying with EU immigration, which May is also trying to curb.

However, May has climbed down on a number of once-strongly held positions already, so there’s a chance she could do it again as pressures continue to heat up.

If you’re looking to take your business international and are unsure what the latest Brexit developments could mean for your business, get in touch with us for expert advice.



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