BRITAIN’S FUTURE RELATIONSHIP WITH THE EU

Prime Minister David Cameron has promised that the Conservative Manifesto for the 2015 general election will contain a commitment to negotiate a “new settlement” with the UK’s European partners in the next Parliament, and when the new settlement has been reached, to hold a referendum on whether to stay in the EU on these new terms; or leave altogether. David Cameron said that legislation enabling a referendum would be drafted before the next general election, to be introduced immediately by an incoming Conservative Government and passed by the end of that year. The Prime Minister promised to complete negotiations and hold the referendum within the first half of the next parliament – that is by the end of 2017

Even if the Conservative Party is not a member of the next British government, foreseen in spring 2015, there will be few in Britain ready and willing to campaign for UK membership of the federal union ‑ which involves, above all and in the first instance, sterling joining the single currency.

Over the years, the UK has won a large number of opt-outs and derogations from the core of the acquis communautaire, and has managed to install a number of emergency brakes into the institutional procedures. Prime Minister David Cameron is demanding the repatriation of powers and competences from Brussels to London.

The UK government is already prepared, as no previous British administration has been, to absent itself from the Council table when matters of fiscal union are being negotiated. It has also declined to participate in the single supervisory mechanism of the banking union. The British Conservatives want fewer rights from the Union in exchange for fewer duties. At the same time, Tory leaders preach across the Channel about ‘the remorseless logic of fiscal union’, and encourage other EU countries to go forward to deeper integration without the UK.

There is general agreement that Britain’s relationship with the EU needs to be addressed afresh in light of the ongoing eurozone crisis. The eurozone countries are determined to press ahead with greater fiscal and political integration, in order to preserve the single currency. The conventional wisdom is that a new treaty will be needed to transform the EU institutions into the governance structures needed for a more federal eurozone. As the UK remains outside the eurozone, there appears to be a consensus across parties and business that it must agree to a new relationship that recognises its different status, especially on decisions that affect the single market.

The UK seeks the return of key powers to Westminster and develop a much looser relationship with the EU, based on a free trade area and would like to see treaty revisions in five main areas, including employment and social law, fisheries, regional aid policy, justice and policing.

Most significantly, David Cameron rejects the notion of an ever closer union among the peoples of Europe, saying: “We understand and respect the right of others to maintain their commitment to this goal. But for Britain – and perhaps for others – it is not the objective. We would be much more comfortable if the treaty specifically said so, freeing those who want to go further, faster, to do so, without being held back by the others." He advocates instead “a vision of flexibility and co‐operation” in which European partners work together for open markets, stronger economies, secure energy supplies, and tackling climate change, global poverty, terrorism and organised crime. Prime Minister David Cameron seems to have lined up with the middle ground of public opinion. Conservative strategists are sure – and many pollsters agree ‐ that most voters would prefer not to leave the EU, but want Britain’s relationship to the EU to be recast.

It is hard to disagree that the EU should work for competitiveness, flexibility, subsidiarity, democratic accountability and fairness. At the same time Cameron’s policy seems to restate Margaret Thatcher’s dissatisfaction with the architecture of the Single Market and the move towards the EMU and deeper political union. More broadly, the rhetoric that power should flow both ways – to and from Brussels – and Mr Cameron’s emphasis on British interests in terms of a better deal resonate with the assumed revival of British nationalism and exceptionalism.

The Prime Minister’s own party is largely divided between those who favour pushing the UK ‘nearly out’ and those who would like to see the UK ‘really out’ of the EU. The position of the small pro-EU fringe has become increasingly difficult within the Conservative Party, yet many of the party’s financial supporters in the business world are strongly opposed to Britain leaving the EU.

Prime Minister Cameron needs Allies

Prime Minister Cameron will hardly have his way as long as he is the only EU head of government who is applying such pressure. If his demands for renegotiation are taken to Brussels, EU politicians might refuse to join the negotiating table because they will be well aware that if they actually return some powers to Britain, other countries are likely to make similar demands.

If positions are locked, the United Kingdom will be heading for the exit. That would hurt both the UK and the EU. In fact, it might lead to the total breakdown of the EU, not because the UK market is indispensable to the EU (it is not) but because it would be the end of an indispensable initiative to reform the EU. A more positive scenario is that one or a few other European Union government leaders join forces with the United Kingdom. Thereafter, the isolation argument would not work. That could kickstart an inner alliance of “healthily skeptic EU friends.” Such an alliance—of, say, Great Britain and export nations heavily dependent on maintained competitiveness such as Sweden, Finland, the Netherlands, Czech Republic—would have to be taken more seriously in Brussels.