A referendum on whether the United Kingdom should remain in the European Union is due to take place before the end of 2017. Those allowed to vote in it are all persons of British, Irish or a Commonwealth citizenship, over the age of 18 and residents of the UK. The Conservative Party election manifesto made this promise before the last elections, and David Cameron is implementing it by renegotiating a set of reforms with his EU counterparts. The UK referendum act provides for four months of campaigning. If there is agreement at the European Union Council on 18-19 February 2016 the referendum can take place as soon as June 2016. There is an ensuing debate in Britain on whether leaving the EU would be an economic disadvantage for the country.
Arguments for and against the UK staying in the EU
The single European market makes it cheaper for British companies to export their goods across Europe. Some business leaders think this boost to economic activity outweighs the billions of pounds in membership fees that Britain would save if it left the EU. Moreover, were the UK to leave the trading bloc, it would risk losing some of its negotiating power internationally. If it did leave, however, the UK would be free to establish its own trade agreements with countries, which are not members of the EU.
The Eurosceptic UKIP leader, Nigel Farage, thinks Britain could follow in Norway’s footsteps. Norway and Switzerland, neither of them an EU member, have to abide by many EU rules in exchange for having access to the single market, but EU laws are not binding for them in areas such as agriculture, justice, and home affairs. The other side to the “amicable divorce” argument is what The Economist has written, that Britain would be subject to the politics and economics of Europe but would no longer have a seat at the table to try to influence matters.
The think-tank “Open Europe,” which supports radical reform of the EU, found that the worst-case “Brexit” scenario is that the UK economy would lose 2.2 per cent of its total GDP by 2030. Yet still, it posits that GDP could rise by 1.6 per cent if the UK could negotiate a free trade deal with Europe and pursue a “very ambitious deregulation”. Pro-Europeans think that the UK’s current status as one of the world’s biggest financial centres will be under threat, if it is no longer seen as a gateway to the EU for US and other banks. On the other hand, Brexit campaigners argue that London’s unique appeal will not be diminished outside the EU.
Barclays reckons that the departure of one of the union’s most powerful economies would affect EU finances and would boost populist anti-EU movements in other countries, the Daily Telegraph says. This would open a “Pandora’s Box” that could lead to the “Collapse of the European Project”. Attracting investors, boosting the pound and reducing the risk that Scotland would “leave the relative safety of the UK for an increasingly uncertain EU” would be the way to go for the UK.
Freedom of movement across the EU opens up job opportunities for UK workers, who often choose to travel on their own free will, thereby making it relatively easy for UK companies operating in the UK to employ workers from other EU countries. UKIP argues that this prevents the United Kingdom from “managing its own borders”. Professor Adrian Favell, while writing for the LSE, states that limiting this freedom would deter the “brightest and the best” of the continent from coming to Britain, create complex new immigration controls and reduce the pool of candidates from whom employers can choose.
What do the people think?
The latest opinion polls reveal that Britons are narrowly in favour of leaving the EU, rather than staying in it. According to The YouGov survey, forty per cent of people would vote in favour of a “Brexit”, thirty eight per cent would support continued EU membership, while sixteen per cent were undecided and six per cent would not vote. Several ‘In’ and ‘Out’ groups have started to campaign hard in recent weeks. The main campaign trying to convince voters that the UK should remain in the EU is Britain Stronger in Europe, led by the Tory peer and former Marks and Spencer’s boss, Lord Stuart Rose.
On the Eurosceptic side, Vote Leave run by Mathew Elliot is a broad based group and includes UKIP’s Douglas Carswell, as well as members of other parties. This campaign has the support of some business leaders and is confident that it will win over Nigel Farage’s Leave.EU to become the official group campaigning for a Brexit. The Leave.EU campaign, which is funded by UKIP donor Arron Banks, focuses on immigration. They also view that Britain should have full control of its borders. The group to be appointed as the official campaign on both sides will have extra benefits of higher spending limits, television broadcasts, and a supposed grant. Another campaign that would support Britain’s EU exit is Get Britain Out. It is an independent cross party, grassroots, Eurosceptic group that wants to restore UK Parliamentary democracy and prevent what it sees as the unaccountable bureaucrats in Brussels from interfering. The Get Britain Out campaign wants to see the UK control and secure its own borders.
The views of British business
Most business leaders are thought to be strongly in favour of the UK staying in the EU. According to the Financial Times a survey which primarily consists of 3,800 businesses earlier this year found 63 per cent believe that if the UK were to leave the EU, this would have a negative impact for Britain. The sentiment is reciprocated by senior executives across Europe, who broadly expect that a British exit from the EU will have a negative impact on the European economy.
However, all of the early campaigning has been done by a business-focused anti-EU group. Business for Britain wants big changes to the UK’s relations with the EU and says the UK should vote to leave if the changes are not fully achieved. Business for Britain is led by Mathew Elliot, who is the founder and former Chief executive of the Taxpayers Alliance and is the former chief executive of a right-wing think-tank, the Taxpayers’ Alliance, and funded by the Daily Telegraph. The Taxpayers’ Alliance’s supporters include Mark Littlewood, Director General of the Institute of Economic Affairs,, Helena Morrissey, CEO of Newton Investment Management, John Caudwell, the founder of Phones4u, Peter Goldstein, co-founder of Superdrug, and the Chief Executive of the clothing retailer Next plc Lord Wolfson.
The EU is the UK’s biggest trading partner and the largest single consumer market in the world. If that United Kingdom were to leave, it would certainly involve risk. According to official figures, Britain exported about £147bn worth of goods and services to EU countries in 2014 a fall of about two per cent from 2013. As a group, this makes the EU the biggest partner, but the top five individual nations include only two EU members: Germany and France. Anti-EU business leaders argue they would do better with China, the third biggest trading partner. A secondary issue involves countries outside Europe, which work with the UK because of its access to the European market. President Barack Obama has repeatedly expressed a preference for the UK remaining in the EU, and ratings agency Standard & Poor‘s has suggested that banking groups might take their headquarters elsewhere if Britain were to leave the EU.
The UK political parties’ stance on David Cameron’s referendum
David Cameron supports Britain staying in the EU, once he has gotten his reforms approved. Mr. Cameron has so far refused to say whether he would start opting for Britain to leave the EU if he does not get what he wants from the other EU leaders, saying instead that he “rules nothing out”. The Former Home Secretary Alan Johnson, a leading figure in Labour’s own campaign, wants the UK to stay in the European Union. The Labour Party, the Scottish and Welsh nationalists (SNP, Plaid Cymru) and notably the Liberal Democrats are also in favour of the UK remaining in the European Union. The Conservative Party is divided and some Cabinet members are expected to campaign against the eventual proposal of their Prime Minister.
The negotiation process within the EU
The UK and EU officials have been trying to reach an agreement that will give way for the U.K’s EU referendum. For months there have been discussions between the UK and EU negotiating teams on the reforms. There is a proposed compromise agreed upon between David Cameron and the European Council President, Donald Tusk. Mr. Cameron has set four main aims for renegotiation he wants to change in the UK’s membership of the EU. These aims were outlined in a letter to European Council President, Donald Tusk in November 2015. The letter recognizes that the UK is not committed to further political integration into the EU. The EU should increase efforts to cut bureaucracy, especially on small and medium enterprises, which the UK Government has said damages business. Ministers want to prevent migrants from entering the UK and claim benefits and housing until they have lived in the country for four years. The European Commission has said such a move would be “highly problematic”. On Eurozone v the Rest, there is an explicit recognition the euro is not the only currency of the European Union, to ensure countries outside the Eurozone are not materially disadvantaged. The U.K wants safeguards that steps towards further financial union cannot be imposed on Non-Eurozone members and the UK will not have to contribute to Eurozone bailouts. Read more: Q&A: What Britain wants from Europe
European Council President, Donald Tusk has put together a draft deal ahead of the 18-19 February EU summit, where the UK’s renegotiation demands are due to be debated. Mr. Cameron has managed to get some of his demands accepted. On sovereignty, the PM has secured a clear legal statement that the UK is not committed to further political integration. Mr. Cameron got new powers for national parliaments to group together to block new EU laws. On competitiveness, the PM has gotten some language that commits the EU to strengthen the internal market and cut red tape. EU migrants are able to send child benefits back home, but would get a lower level if the cost of living in the country where the child is, is lower. Eurozone versus the Rest: There will be a new mechanism to get the Eurozone to think again about decisions that could affect the UK. The PM has gotten some unexpected gains, making it easier for countries to screen terror suspects, even if the threat they pose is not imminent. Let us now see what the European Council says on the package as a whole.
Dhelon Curtis Neillssen Raynold holds a Bachelor’s Degree in Political Science from Drew University and is currently pursuing a Master’s of Liberal Arts in International Relations at Harvard University. He has worked with the Sirleaf Market Women’s Fund and undertook an in-service traineeship with the European Economic & Social Committee (EESC) in Brussels, as well as internships with the United Nations, the World Youth Alliance (WYA), and UN-HABITAT.
