Norway's arms-length relationship with the European Union is popular among British politicians looking for an alternative to full membership — but the Nordic country's prime minister is equivocal about whether the U.K. should look to imitate it.
"I think Norway is a small country that is used to the fact that larger countries decide a lot in the international economy. I'm not sure if the Brits will go back to a system where the EU decides and they just follow up," Erna Solberg, Norway's leader since 2013, told CNBC on Thursday in London.
Some U.K. politicians who want the country to vote in the June referendum to leave the EU say Norway exemplifies how to thrive outside the 28-country bloc. Like Iceland and Liechtenstein, Norway belongs to the European Economic Area, but not the EU. This model allows countries to participate in the European common market for goods, services, people and capital, while opting out of EU joint policy on issues like agriculture, fisheries — one of Norway's major industries — and indirect taxation.
Fans of the Norwegian model include Conservative politician Owen Paterson, who was formerly the environment secretary and is campaigning for Brexit. He says membership of just the EEA would allow the U.K. to benefit from the free movement of workers in the region, without having to accept migrants' dependents or extended family members.
Critics of the Norwegian model say the U.K. would lose sovereignty, because it would be obliged to adopt the economic rules governing the single market without having a say over them.
"We have a model that we are part of the internal market — that means that all the labor regulations, all the market regulations, [are] put into Norwegian policies — and we are not at the decision-making table ... We are giving quite a lot of sovereignty over to the EU without voting on those issues," Solberg told CNBC on Thursday.
She added that the U.K. might be forced to adopt EU regulation it had previously opted out of if it quit the union but remained part of the EEA.
"It is good for Norwegian businesses — but you are lacking the voice and [the U.K.] will have to adapt to a lot of EU regulations that you in fact, some of them, you have even opted out of," Solberg told CNBC.
Major differences exist between the U.K. and Norway's economies, despite the countries' proximity and similarly high levels of wealth and living standards.
At more than 64 million, the U.K'.s population is around 13 times the population of Norway. The Nordic country is a major exporter of natural gas and petroleum, and its other important industries are shipping, fishing and metals, particularly aluminum. By contrast, the U.K. economy is dominated by the services sector, particularly financial services.
Some of the U.K. rhetoric from both pro- and anti-"Brexit" camps has hung on migration. The influx of refugees and migrants into Europe in recent months has divided public opinion in Britain and other member countries. Some say individual governments, rather than EU policymakers, should decide how many people each country accepts.
Others fear Brexit might alter the direction of economic policy in the union, which with the U.K. out of it could be dominated by the typically less pro-market politicians of France and Germany.
