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The Centre for European Reform thinktank believes a deal is possible but requires creativity – and a concession from the Conservatives on the European court of justice.

As the Centre for European Reform spelled out in a briefing paper last week, the consequences of leaving the EU single market and customs union in 2019 without a new trade deal, or at least a transitional trading arrangement giving us time to conclude such a deal, would be utterly disastrous.

Why the costs to the UK economy of failing to strike a deal with the EU would dwarf those of signing up to a bad deal, from John Springford and Simon Tilford of the Centre for European Reform.

“Both sides will have to make some compromises -- but we shouldn’t fool ourselves into thinking that it won’t mainly have to be the UK,” said Agata Gostynska-Jakubowska, research fellow at the Centre for European Reform in London. “Brussels seems to be aware that we can interpret some of the tougher remarks in the UK as being directed to a domestic audience.”

The implications for individual countries could be momentous, particularly for those outside the eurozone. Mishandled, as Agata Gostynska-Jakubowska and Christian Odendahl note in a new report for the Centre for European Reform, this process could increase divisions between member states and even lead to further disintegration.

“After the general election, Theresa May is going to have to sell a softer message on ECJ oversight to the British people,” says Camino Mortera-Martinez of the Centre for European Reform. “This is essential if a bespoke deal on justice and home affairs is to be agreed.”

Camino Mortera-Martinez, a research fellow from the Centre for European Reform, says the attacks will renew the focus on security issues in the Brexit talks. “Every time there is a scare like this, it highlights that no country is alone,” she says. That the bombing was in Manchester also punctures the argument, prevalent during last year’s Brexit referendum campaign, linking mass migration with terrorism, she adds. “Just because you are outside the Schengen area, doesn’t mean you escape terrorism. Closing borders won’t shield you from the evils of the world,” Ms Mortera-Martinez says.

“We’re seeing a cyclical recovery because we finally had the European Central Bank operating like a normal central bank and doing quantitative easing,” says analyst John Springford of the Centre for European Reform. ...Italy’s economy is still in the slow lane with annualized growth of just .8 percent. “It’s growing very slowly, its banks still haven’t been sorted out and there’s a lot of political instability,” says Springford.

After splits emerged between North and South in the euro crisis, and East and West over refugees, plus the Brexit referendum, the EU needs to be more flexible if it is to survive future challenges, writes Agata Gostyńska-Jakubowska and Christian Odendahl of the Centre for European Reform.