SPECIAL REPORT BRITAIN AND EUROPE October 17th 2015 The reluctant European 20151017_SRBRITEU.indd 1 05/10/2015 16:26 SPECIAL REPORT BRITAIN AND EUROPE The reluctant European Though Britain has always been rather half-hearted about the European Union, its membership has been beneficial for all concerned, argues John Peet. It should stay in the club THE QUESTION THAT will be put to British voters, probably in the au- CONTENTS tumn of 2016, sounds straightforward: “Should the United Kingdom re- main a member of the European Union, or leave the European Union?” 4 How referendums can go (The final clause was added last month at the insistence of the Electoral wrong Commission, which decided the question might look biased without it.) Herding cats When David Cameron, Britain’s Conservative prime minister, first pro- 5 Euroscepticism and its roots posed a referendum in early 2013, he was hoping that the answer would The open sea ACKNOWLEDGMENTS also be straightforward. Once he had successfully renegotiated some of Britain’s membership terms, the electorate would duly endorse him by 6 Britain’s clout in Brussels Besides those mentioned in the text, Not what it was the author would like to thank the voting to stay in. following for their help: Andy But referendums are by theirnature chancy affairs, as a string ofpre- 7 Costs and benefits Bagnall, Matthew Baldwin, Steven vious European examples have shown (see box later in this article). Mr Common market economics Blockmans, Stephen Booth, Hugo Cameron is well aware that the September 2014 referendum on Scottish Brady, Helen Campbell, Martin 9 The euro zone Donnelly, Monique Ebell, Matthew independence, an issue about which he said he felt far more strongly Elliott, Jonathan Faull, Maurice than he does about the EU, became a closer-run thing than expected. Insider dealing Fraser, Henri Gétaz, Sarah Gillett, There is no guarantee that the EU referendum will go his way, and if vot- John Grant, David Hannay, Peter 11 Britain’s post-Brexit options Hargreaves, Simon Hix, Sara Hobolt, ers chose to leave it would cause great uncertainty not only for business Alternative lifestyles Kate Hoey, Martin Howe, Bernard and the economy but for Mr Cameron himself. Assuming that he cam- Jenkin, Richard Jones, Jyrki paigns forBritain to stay in, which seems a near-certainty, it is hard to see 13 The wider world Katainen, John Kerr, Anand Menon, how he could remain prime minister if he lost the vote. Moreover, the The geopolitical question David Moran, Jon Moynihan, Jesse Norman, Vivien Pertusot, Gerhard Scottish Nationalists have said that if Britain were to withdraw from the Pfister, Emma Reynolds, Roland EU, they would press for another referendum on Scottish independence, A list of sources is at Rudd, Raoul Ruparel, Laura Sandys, which they might expect to win. So Brexit could, in due course, lead to the Economist.com/specialreports Stefano Sannino, Martin Schulz, break-up ofthe United Kingdom. The EU referendum will thus become a Pierre Sellal, Nigel Sheinwald, Gisela An audio interview with Stuart, Frans Timmermans, Christa defining moment not just for Britain’s relationship with the rest of Eu- the author is at Tobler, Stephen Wall, Manfred Weber rope but for the future ofthe country itself. Economist.com/audiovideo/ and Peter Wilding. When Mr Cameron became Tory leader in 2005, and then prime 1 specialreports The Economist October 17th 2015 1 SPECIAL REPORT BRITAIN AND EUROPE Who’s for ever closer union? 2 minister of a Tory-Liberal Democrat coalition government in such fields as services, digital technology and energy. Fourth, he 2010, he had a moderately Eurosceptic reputation. As part of his is demanding some form of opt-out for Britain from the treaties’ leadership campaign he pledged to pull the Tories out of the objective of “ever closer union among the peoples of Europe”. European People’s Party, the umbrella organisation for the cen- Fifth, he is determined to give national parliaments, which he tre-right in the European Parliament, and in 2009 he did so. That callsthe true source ofdemocraticauthorityin the European pro- decision helps explain why Mr Cameron has often found it hard ject, greater powers to block EU legislation. And finally, he wants to form alliances with other European centre-right leaders, nota- a guarantee that an increasingly integrated euro zone will not act bly Germany’s Angela Merkel. Yet although Mr Cameron has against the interests ofEU countries that remain outside it. also urged his party to stop “banging on about Europe”, his Eu- These demands have been carefully calibrated to ensure rosceptic backbenchers, scared witless by the rise of Nigel Far- they have a chance of success. For example, Europe’s recent mi- age’s virulently anti-EU UK Independence Party (UKIP), have gration and refugee crisis may have made limiting welfare bene- constantly hassled him to adopt a tougher line with Brussels. His fits formigrants more acceptable to public opinion in several oth- response has generally been to appease them. er member countries, including Germany. Two recent cases in One earlymorsel he threwthem wasthe 2011European Un- the European Court of Justice suggest that migrants who have ion Act, which requires any EU-wide treaty that passes substan- not lived in a country and contributed to its welfare system tive new powers to Brussels to be put to a British referendum. might be legally stopped from claiming benefits as soon as they That sounded like a big concession, but no new treaties were arrive. Britain (and maybe others) could impose some minimum then in prospect. Another was to launch a wide-ranging review length-of-residence requirements that should avoid charges of by the British government of the “balance of competences” be- discrimination against other EU nationals. tween the EU and national governments, in hopes that it would In the same vein, the European Commission under Jean- favour some shift of powers back from Brussels. Unfortunately Claude Juncker has already announced plans to cut red tape and for Mr Cameron, the review concluded that the present balance unnecessary regulation; indeed, it has withdrawn some 80 draft was about right, so the Tories quietly buried it. directives and is considering repealing others already in force. It has also launched new efforts to complete the single market for We will do such things… energy, digital technology and services, and to add a capital-mar- In 2012 Mr Cameron offered the Eurosceptics another sop: kets union. Even the Netherlands, which has traditionally been he promised to deliver a big flag-waving speech on Britain and in favour of the EU, has said that the era of ever closer union is the EU in a continental European city. He eventually gave it at the over, and the European Council conceded in June last year that London headquarters of Bloomberg, an international media the phrase could be interpreted in different ways. The Dutch and group, in January 2013, promising that, ifthe Tories were re-elect- Scandinavians also want to enhance the role of national parlia- ed in May 2015, he would renegotiate Britain’s membership and ments, as does Frans Timmermans, a commission vice-president hold an in-out referendum by the end of 2017. He later declared and former Dutch foreign minister. And the eight other EU coun- that the renegotiation provided a chance to “reform the EU and tries besides Britain that are not in the euro will also be keen to fundamentally change Britain’s relationship with it” and that, to ensure that the euro zone does not act against their interests. underpin this, he would aim for “full-on treaty change”. Even more important, no EU country and none of the Brus- Yet the reforms that Mr Cameron has since gone on to pro- sels elite actively want Britain to leave. Everybody understands pose, most recently at an EU meeting of heads of government in that Brexit would inflict grave damage on the EU (though some June, hardly match this rhetoric of fundamental change. That reckon that the damage to Britain would be greater still). As one may be why his government has been coy about setting them of Europe’s most important powers in foreign policy and de- out in much detail ahead of the EU summit in December that is fence, Britain would be missed. Yet it is also clear that there are meant to agree to them. Still, his proposals can be summarised limits to the concessions other countries are willing to make to under six broad headings. persuade it to stay. And Mr Cameron is well aware that the re- First, migration. Mr Cameron is seeking to put a stop to formshe islookingforwill need the assentnotjustof the govern- “welfare tourism” by limitingsome benefits fornew immigrants. ments of all 27 other EU countries but, in most cases, of the Euro- In particular, he wants a four-year ban on benefits, including pean Parliament as well. those paid to people in work, being claimed by migrants who ar- He also knows that treaty change is unpopular, difficult to rive from the rest ofthe EU. Second, he is looking for a general re- achieve and slow to implement. That means he may have to set- duction in EU regulation, and in some cases a repatriation ofreg- tle for a protocol or some other binding declaration that will be ulatory powers from Brussels to national capitals. Third, he formally ratified only if and when a future treaty is in the works would like to see a strongerpush to complete the single marketin (this is sometimes called a “postdated cheque”, modelled on 1 2 The Economist October 17th 2015 SPECIAL REPORT BRITAIN AND EUROPE 2 concessions offered to Denmark and Ireland in the past and rat- ified only later).