Most British politicians have come to accept the outcome of the Brexit referendum, and that the will of the voters must now be carried out in a manner that best upholds Britain’s national interests. Because the EU’s internal market has always been a key priority for the UK, one widely discussed option, which has cross-party support, is the so-called Norway model: membership in the European Economic Area (EEA).

Under the EEA, Norway (along with Iceland) has full, unfettered access to the EU’s single market, including for financial services. But access to the internal market also requires EEA members to accept full freedom of movement not only for goods, services, and capital, but also for workers.

Would the Norway option be better for Britain than full EU membership? A simple thought experiment might help: go back four decades and assume that France had vetoed UK membership in the EU, and that the UK had joined the EEA instead. Under this scenario, the Brexit referendum would have been on whether the UK should remain in the EEA. Would the arguments offered by this hypothetical Leave campaign have been any different?

The real Leave campaign’s arguments focused on three issues: the UK’s contributions to the EU budget, free movement for workers, and national sovereignty. Let’s consider them in turn.

The campaign argued that the money the UK contributes to the EU budget as a member state could be better spent at home. This same argument would apply against EEA membership. In fact, the UK’s financial contribution to the EU is actually smaller, relative to its national income, than Norway’s under the EEA.

The Leave campaign also claimed that free movement of labour heightens the supposed dangers of terrorism and higher unemployment for British workers. But the provisions governing labour mobility in the EU apply to Norway and all EEA countries as well. To the extent that freedom of movement was the key reason for leaving the EU, the Norway model would be equally unacceptable.

This brings us to the Leave campaign’s third argument and central theme: ‘getting back control’ of the rules and regulations governing Britain’s economy. This objective would be an even stronger argument against EEA membership than it was against EU membership. Under the EEA, the UK would still have to abide by the rules and regulations set in Brussels, but it would have far less say in their creation than it does as an EU member.

In fact, within the EU, Britain had considerable influence over financial services, the most important industry in its economy.

“Getting back control” was also directed against the EU Court of Justice in Luxembourg, whose judgments, by convention, have precedence over judgments by national courts. But the EEA also has its own court, whose judgments are binding on EEA member states. In short, all the arguments against EU membership also apply, often with even more force, against EEA membership.

Still, some countries do choose this option. The Norwegians have consistently preferred to remain in the EEA, and have voted more than once, by large majorities, against joining the EU.

Denmark has been a similar case since 1992, when Danish voters rejected eurozone membership under the Maastricht Treaty. Now, the Danish krone is so tightly linked to the euro that Denmark’s central bank has effectively lost its independence. By joining the euro, Denmark would at least have gained a seat at the table. The Swiss rejected even EEA membership in a referendum; however, to do business with the EU on the level it wanted, the Swiss government later had to accept most of the EEA rules anyway, including the free movement of people and contributions to the EU budget.

As these real-world examples show, no country that wants to benefit from the European project has been able to have its cake and eat it. Open borders and economic integration require common rules.

A “spaghetti bowl” of different à la carte arrangements would not work for a continent of more than 30 small and medium-size countries and more than 500 million people. The EU provides this set of common rules, buttressed by common institutions that give every country, even the smallest, a say.

This is the balancing act of sovereignty in Europe: Each state remains formally sovereign, but if it wants to prosper economically, it must accept the common norms and regulations that enable Europe’s intensive cross-border division of labour. Of course, Europe is more than just a free-trade area; it is also a hub of shared social and cultural life. This is why freedom of movement is so appealing, not only from an economic point of view.

Some smaller countries have abdicated their role in influencing Europe’s future. But it is surprising to see a country with such a long history of global leadership as Britain suddenly withdrawing into itself. Having abandoned its historical role in shaping Europe’s future, will the UK really be content to remain on the sidelines?

Daniel Gros is director of the Center for European Policy Studies.

Norway’s property boom doesn’t look like ending any time soon. According to Real Estate Norway, average prices have increased by 7.3 percent over the past year – and as much as 13.4 percent in the capital Oslo. The association has lifted its previous predictions by a twofold and now expects nationwide prices to end 7-8 percent up in 2016.

And while the economy of western Europe’s largest petroleum producer has benefited from a partial rebound in oil prices, continental uncertainty fueled by British plans to leave the European Union suggests rates may remain at their record low for at least another year.

That all sounds like good news for Norway’s numerous mortgage owners. But with the economy so reliant on the price of crude, what about warnings from the International Monetary Fund that “a persistent low oil price could trigger a sharp correction in house prices”?

In fact, the Norwegian housing market was already predicted to burst in 2012 by the American economist Robert Schiller. Four years later, there’s little sign of weariness. Even the oil plunge of late 2014 failed to break the market, as the above chart shows. The most recent downturn in the price of oil “has not been reflected at all in house prices,” Marius Gonsholt Grov, an economist at Handelsbanken, said by phone. “The economy is adapting to sustained lower interest rates. We may therefore have higher debt growth, and stronger growth in house prices over time.”

It helps to have a $860 billion sovereign wealth fund to back the economy and support the labor market. In the meantime, Oslo has gained renewed popularity among its Nordic siblings, revamping its architecture and art scene and reshaping so-called Scandinavian “cool.”

Norwegians love their homes. Nearly 85 per cent of them own the property they live in, usually with the help of a bank. So much so, in fact, that Norway has the highest proportion of mortgages in Europe – 65.6 per cent of the population has a home loan, according to latest available data from Eurostat. This is partly the result of low interest rates, generous tax reliefs for home owners and fierce competition among commercial banks, meaning the property market has made the most of Norwegians enjoying a long spell of easy access to cheap credit.

(BLOOMBERG)