The House of Commons Foreign Affairs Committee took evidence from both sides in the campaign and came to the conclusion that "whatever the outcome, there will be a clearer path for the United Kingdom to follow."
The committee said that if the UK left the EU, then negotiating a bespoke free trade agreement would be a likely path to follow. They also said the Government should recognize the probability of no mutual interest deal being concluded within the two-year notice period, as outlined in Article 50 of the Treaty of Lisbon, which determines how member states exit the union.
Have you seen our report on the #EURef? Take a look at our balanced analysis: https://t.co/pVzjmtojsZ pic.twitter.com/sU1EetgIrL
— Foreign Affairs Ctte (@CommonsForeign) 4 May 2016
"If no deal could be concluded within the two-year notice period, the UK would move to standard World Trade Organization relationship terms and would then need to decide which of the 6,987 directly-applicable EU Regulations would need to be replaced by UK law. Mutual economic interests should result in a comprehensive free trade agreement over time," the report said.
This report acknowledges that all key UK allies support the UK remaining in the EU, partly because for some allies, such as the US, the UK is seen as a positive influence on the direction of EU foreign and defense policy. For others the UK is a useful entry point to the EU single market.
Instability in Europe
"There is no doubt that Europe faces increasing instability in its neighborhood, from Libya to Syria to Ukraine," the parliamentarians said.
"There is a debate about whether 'Brexit' would destabilize the rest of the EU at a time when it is struggling to cope with currency and migration crises, or whether it would spur the remainder of the EU to act more coherently.
"Either way, the UK would no longer be a part of the 'balance of power' in the EU, which could have an impact on how the EU develops with respect to its economy, its enlargement process, and its confidence and capabilities in its regional and global roles," the report says.
The issue has become toxic throughout Europe, with many politicians and commentators saying the Eurozone is in crisis because it is a dysfunctional currency as there is no common fiscal or taxation policy.
"However, to become sustainable, the Eurozone will need to reform in ways which entail greater economic, financial and fiscal co-ordination and integration for participating states. This could leave the UK on the outside of an ever-tighter decision-making majority, with Eurozone countries banding together in ways which could damage UK interests, particularly in the financial sector," the committee concluded.
"This was recognized as an issue in the Government's renegotiation, leading to future changes aimed at protecting the UK as a non-euro state. However, despite the safeguards, the UK inside the EU would not necessarily be able to stop the potentially detrimental political consequences of greater Eurozone integration," the report said.
