European policy consultants
Rural development and renewable energy

Will a re-elected David Cameron lead UK out of the European union?

The PM said "today the main, over-riding purpose of the European Union is ... not to win peace, but to secure prosperity."

He spoke about about how the European Union must change – both to deliver prosperity and to retain the support of its peoples.

He referred to the European Union as "a family of democratic nations, whose essential foundation is the single market rather than the single currency". Those outside the euro zone recognise that those in it are likely to need to make some big institutional changes. But members of the Eurozone should also accept that those who remain outside it need changes 'to safeguard our interests and strengthen democratic legitimacy'.

He stressed that Britain 'is at the heart of the Single Market, and must remain so', and accepted that the Single Market remains incomplete in services, energy and digital and 'is only half the success it could be'. He wants completing the single market to be 'our driving mission'.

He said he wants to address these and other challenges: 'if we don’t..., the danger is that Europe will fail and the British people will drift towards the exit.'

He made clear he does not want that to happen: "I want the European Union to be a success. And I want a relationship between Britain and the EU that keeps us in it."

David Cameron made what he called a 'heretical proposition'. He accepted that the European Treaty commits the Member States to “lay the foundations of an ever closer union among the peoples of Europe”. In his view, this has been interpreted as greater centralisation.

He said that for Britain – and perhaps for others – 'ever closer union should no longer be the objective, and he would be much more comfortable if the Treaty specifically said so'.

He set out a different vision - of a flexible union of free member states who share treaties and institutions and pursue together the ideal of co-operation... to advance our shared interests by using our collective power to open markets. And to build a strong economic base across the whole of Europe.

He believes in nations working together to protect the security and diversity of energy supplies; to tackle climate change and global poverty; to work together against terrorism and organised crime; and to continue to welcome new countries into the EU.

David Cameron said people feel that the EU is heading in a direction that they never signed up to and that many ask “why can’t we just have what we voted to join – a common market?” (though he did not himself endorse that myth in this speech).

In calling for a referendum, he tackled the suggestion (including by his Deputy, Nick Clegg, though he was not mentioned) that this creates uncertainty for business and puts a question mark over Britain’s place in the European Union. He said 'the question mark is already there and ignoring it won’t make it go away. In fact, quite the reverse. Those who refuse to contemplate consulting the British people, would in my view make more likely our eventual exit'.

Buut he also addressed the argument that the solution is to hold a straight in-out referendum now. He does not believe that to make a decision at this moment is the right way forward - 'a vote today between the status quo and leaving would be an entirely false choice'.

We don’t know what sort of EU will emerge from this crisis, and it is is not the right time to make such a momentous decision about the future of our country. It would be wrong to ask people whether to stay or go before we have had a chance to put the relationship right.

He said that 'the European Union that emerges from the Eurozone crisis is going to be a very different body': how can we sensibly answer the question ‘in or out’ without being able to say what is it exactly that we are choosing to be in or out of?’

At some stage in the next few years the EU will need to agree on Treaty change to make the changes needed for the long term future of the Euro, and he called for this to be done in a new Treaty.

The next Conservative Manifesto in 2015 will ask for a mandate from the British people for a Conservative Government to negotiate a new settlement with our European partners in the next Parliament, a relationship with the Single Market at its heart.

When any new Conservative government had negotiated a 'new settlement', it would give the British people a referendum with a very simple choice: to stay in the EU on these new terms; or to come out altogether - an in-out referendum, to be held in the first half of a new Parliament, ie. before 2018.

David Cameron accepted that Britain has more power and influence as part of the EU, and that even if we leave the EU, we cannot of course leave Europe, which will remain our biggest market, as well as our geographical neighbourhood. That 'hundreds of thousands of British people now take for granted their right to work, live or retire in any other EU country'.

If we pulled out completely, decisions made in the EU would continue to have a profound effect on our country, but we would have lost all our remaining voice in those decisions.

We would need to weigh up very carefully the consequences of no longer being inside the EU and its single market, as a full member.

Continued access to the Single Market is vital for British businesses and British jobs. Since 2004, Britain has been the destination for one in five of all inward investments into Europe, and being part of the Single Market has been key to that success.

He questioned whether it would really be in Britain's interest to 'turn ourselves into Norway or Switzerland – with access to the single market but outside the EU'. Whilst he admires those countries, they are very different from us. Norway is part of the single market but has no say at all in setting its rules: it just has to implement its directives. The Swiss have to negotiate access to the Single Market sector by sector, accepting EU rules in order to get full access to the Single Market, including in key sectors like financial services.

There is no doubt that we are more powerful in Washington, in Beijing, in Delhi because we are a powerful player in the European Union, and that matters for British jobs and British security. He recognised the United States and other friends around the world have told us very clearly that they want Britain to remain in the EU.

If we left the European Union, it would be a one-way ticket, not a return.

David Cameron accepted that Britain has more power and influence as part of the EU, and that even if we leave the EU, we cannot of course leave Europe, which will remain our biggest market, as well as our geographical neighbourhood. That 'hundreds of thousands of British people now take for granted their right to work, live or retire in any other EU country'.

If we pulled out completely, decisions made in the EU would continue to have a profound effect on our country, but we would have lost all our remaining voice in those decisions.

We would need to weigh up very carefully the consequences of no longer being inside the EU and its single market, as a full member.

Continued access to the Single Market is vital for British businesses and British jobs. Since 2004, Britain has been the destination for one in five of all inward investments into Europe, and being part of the Single Market has been key to that success.

He questioned whether it would really be in Britain's interest to 'turn ourselves into Norway or Switzerland – with access to the single market but outside the EU'. Whilst he admires those countries, they are very different from us. Norway is part of the single market but has no say at all in setting its rules: it just has to implement its directives. The Swiss have to negotiate access to the Single Market sector by sector, accepting EU rules in order to get full access to the Single Market, including in key sectors like financial services.

"There is no doubt that we are more powerful in Washington, in Beijing, in Delhi because we are a powerful player in the European Union, and that matters for British jobs and British security". He recognised the United States and other friends around the world have told us very clearly that they want Britain to remain in the EU.

He made clear "if we left the European Union, it would be a one-way ticket, not a return."

David Cameron recognised that some will say the vision he has outlined will be impossible to achieve, that there is no way our European partners will co-operate, and that the British people have set themselves on a path to inevitable exit.

But he believes 'we can deliver a more flexible, adaptable and open European Union', and achieve a new settlement. He made clear that 'when the referendum comes, if we can negotiate such an arrangement, I will campaign for it with all my heart and soul'.

He refused to answer questions from the BBC and others, who asked whether, if he could not achieve such a settlement he would campaign for a No vote.

At the time of writing, polls suggest it is unlikely that David Cameron would be Prime Minister after May 2015, and the economic prospects do not suggest that his prospects will improve before the election. But he may yet make a surprise recovery in the polls, as others have done before.

But he has set a challenge for whoever succeeds him, and in particular for Ed Miliband, who made it clear in subsequent PM Questions in the House that he would not support an 'in / out' referendum. But Mr Miliband has said he would not repeal the European Union Act 2011, which would require a referendum befor any significant Treaty change could be implemented.

So a referendum on UK membership of the EU is now inevitable some time before 2018.

To read the full speech, see www.number10.gov.uk

In a letter to the Times (24th January), a group of business leaders, including Sir Simon Robertson of Rolls Royce, Xavier Rolet of the London Stock Exchange and James Towshend of Velcourt, say they agree with David Cameron that "Britain's best chance of success is as part of a reformed Europe''. They argue the Euro crisis has created the circumstances for a new EU settlement, and that this is the moment to push for a more flexible, competitive EU, completing the single market and 'quashing the culture of red tape'.

One of the key questions must be 'what are David Cameron's chances of securing a better deal?' - and would he campaign for a No vote, and UK exit from EU, if he cannot do so?

Chancellor Angela Merkel has said she is 'ready to talk' but 'other countries have different wishes and we must find a fair compromise'.

President Francois Hollande, however, has rejected any renegotiation: "Europe must be taken as it is", he said, "we can help it to evolve ... but we can't offer to diminish it on the ground of (Britain) staying in". Foreign Minister Lauren Fabius has said "if Britain wants to leave Europe, we will roll out the red carpet for you" - a joke which masks a fairly widespread reaction in other European capitals.

Only the Czech Prime Minister, Petr Necas, has come out in support of Mr Cameron on the need to negotiate a more flexible and open EU. Some European leaders appear to take it for granted that UK voters would not vote to leave, even if Mr Cameron cannot secure improved terms.

It is important to remember that any new Treaty will have to be agreed by unanimity. Preferential terms might be secured for a group of member states remaining for the moment outside the Eurozone (remembering that all but UK and Denmark remain committed to joining the Euro when the time is right), but it is highly unlikely that all member states would agree to a Treaty which gave special terms to any ony member state, because it is widely seen this would lead to the unravelling of the single market.

Gunther Krichbaum, chairman of the Bundestag EU committee, accused Mr Cameron of blackmailing the EU, and said "there is and can be no renegotiation in Cameron's sense".

However, we have been here before. Harold Wilson claimed that he had 'renegotiated' the terms of Britain's membership before the 1975 referendum (when over two thirds of the British voters suppoerted continued membership), but in practice, little had changed.

It is unlikely that, were he to be re-elected with an overall majority in 2015, David Cameron would be able to secure substantially more favourable terms for Britain's continued membership of the EU; but fellow European leaders would be keen to give him a reason to campaign for continued membership, which would be difficult if he had clearly secured no improvement in the terms.

As referred to above, this is one of the great myths of Britain's membership - that we signed up only for a common market but it has become so much more.

As Edward Heath, who led Britain into the then Common Market, said "the phrase 'common market' underestimates and undervalues the Community, and for this reason tends to mislead" (November 1966, ie. long before accession). In June 1971, he told the House of Commons "we have always said that as members of the enlarged Community we would play our full part in the progress towards economic and monetary union" .

Speaking in 1974, a year before the referendum, then Prime Minister Harold Wilson said:
Europe now threatens us with a further loss of Britain's control of its own affairs. We shall restore to the British people the right to decide the final issue of British membership".

He went on "if renegotiations are succesful the people should have the right to decide the issue through a referendum ... if renegotiations do not succeed, we shall consult the British people on the adviseability of negotiating our withdrawal".

As Matthew Parris points out in the Times (24th January), the renegotiation proved to be nothing like as fundamental as many had hoped. As he put it, "the only difference is that, for the same price tag, Mr Cameron is buying a great deal more time".

The EU's 27 member governments recently spelt out their deep discontent over the current relationship with Switzerland, calling for a new arrangement similar to the Norwegian model.

Every two years, the EU assesses relations with four countries that are part of the European Free Trade Agreement (EFTA). Just before Christmas 2012 the EU report declared the Swiss
option as 'unsatisfactory'.

Swiss participation in the single market has stalled for years as EU Member States demand a
Norway type arrangement of automatically adopting nearly all EU laws while having no say on their creation.

The EU is refusing to allow Switzerland further integration into the EU single market in lucrative sectors like energy unless it gives up the system of bilateral agreements which govern EU-Swiss relations. Switzerland has access to only 60-70% of the EU's internal market, missing out on agriculture and most service industries. This includes financial services where the UK has a £17.6 billion trade surplus with the EU. In exchange, the Swiss have to adopt many EU laws and rules without having any say in their drafting.

As Fiona Hall MEP (Lib Dem leader in the Parliament) puts it, "There is no Britzerland solution on the table and never will be... The idea has more holes than a Swiss cheese."

Ministers in Copenhagen and Stockholm were lukewarm in their response to David Cameron's speech.

Sweden's minister for European Affairs, Birgitta Ohlsson, said “The EU is not a loose network. It's a union with clear game rules."

Nicolai Wammen, the Danish minister for European Affairs, said "We have no intentions of following Cameron in that direction [to a referendum]. It's in Denmark's interests to have as close ties as possible to the centre of Europe. Denmark ... will not change our EU direction if the Brits choose to leave the EU”.

In the Netherlands, a traditional British ally, Foreign Affairs Minister Frans Timmermans agreed with Cameron that the EU needed to be reformed, saying the Single Market and free trade should be promoted. But he added "you only reform the EU from within, not by running away from it ... The [Dutch] government does not want opt-out clauses and neither seeks a redefinition of the relationship with the European Union."

www.euractiv.com

More than a third of voters would consider voting for a party that backs Britain's withdrawal from the European Union, a poll published on 5th March '13 suggests.

It would be difficult for David Cameron to win an outright majority for the Conservatives in the May 2015 General Election without support from Eurosceptic and typically right-leaning supporters, who polls are indicating may be inclined to switch their support to the UK Independence Party (UKIP), according to some commentators.

This is particularly worrying for the Conservatives as oit follows immediately on the Eastleigh by-election, where that had been expected to take one of their key target seats from their Lib Dem coalition partners, but in fact were pushed into third place by UKIP. The YouGov poll found 36% of respondents would potentially back UKIP them in a general elction - although responses would typically be very different were such an election in prospect, as voters would then consuider who would most likely foorm a government, and whether by voting UKIP they would let Labour secure a majority.

The point here, says Eurinco, is that without an overall Conservative majority in 2015, David Cameron would be unable to implement his pledge to hold a referendum on EU membership in 2017. If the Lib Dems were to hold enough seats to form a further coalition with one of the bigger parties, they would block a referendum for as long as possible, if Labour were to form the next Government, Ed Miliband has also indicated he would not favour an In / Out referendum.

However, as we have pointed out elsewhere, at some point the European Union Act 2011, which Ed Miliband has indicated he would not repeal, would force whichever party is in power to hold a referendum on any significant Treaty change which might arise. Although the first referendum would be on the case for ratifying some relatively obscure change in EU legislation, assuming the British elctorate voted No to that, a further referendum might be needed some six months later, as has happenend in Ireland and Denmark in recent years.

The difference is that in UK, that second referendum would effectively be on an In / Out question. So even if the Conservatives were to fail to secure a majority in the 2015 election - which seems a remote probability at the time of writing (March '13) - a referendum would at some point be forced upon an incoming government.

In Eurinco's assessment, the prospect of UK leaving the EU within the next five years remains very real, regardless of the fortunes of the Conservative party.

The YouGov poll also showed that 60% of UKIP current supporters voted Conservative in 2010 -but only 4% of those surveyed by YouGov said they would definitely vote for UKIP in a national election, suggesting the Conservatives might yet win back disillusioned voters.

The YouGov poll, which put the Labour Party on 40% and the Conservatives on 31%, suggested that Cameron's coalition partners the Lib Dems lie joint third with UKIP on 12% - despite having won the Eastleigh by-election in the most unfavourable of circumstances.

Perhaps surprisingly, YouGov indicated that UKIP is also drawing support from voters who previously backed the pro-EU Lib Dems, presumably because they were voting Lib Dem as a form of protest against the governing parties in 2010. The Lib Dems, having now become a party of government, would expect to lose this element of their vote.

But what happens if UKIP continues to make progress, perhaps even coming second in the 2014 Euro elections, and further eroding both Conservative and Lib Dem support? The prospect will then arise that they might come third in the 2015 General Election. If they won significantly more votes than the Lib Dems, they might not only pick up one or two Westminster seats, they might even have more seats than the Lib Dems.

UKIP has never yet managed to win a Westminster seat - though most of the British press effectively treated the Eastleigh by-election as an honorary gain, effectively ignoring the newly-elected Lib Dem MP, Mike Thornton.

mike-thornton-mp.jpg

Who he? Lib Dem MP Mike Thornton, who actually won Eastleigh by-election 28th February '13.

One of the effects of Britain's skewed 'First past the post' electoral system (which was retained following a referendum) is that if UKIP electoral support was to rise above about 15% and concentrated in certain parts of the country, they could suddenly start winning significant numbers of seats in Parliament.

So it is not impossible that UKIP could replace the Lib Dems as the third party, in terms of electoral support and possibly even in terms of seats. Might a Conservative / UKIP arrangement, presumably under a different and more Eurosceptic Conservative leader, then form the government after 2015? If so, they would probably agree to campaign for a No vote in an early referendum on the current terms of membership.

The truth is, it is too early to tell who might form the next Government, and too early to write of the Conservative prospects of securing an overall majority one way or the other. There are a number of circumstances in which Britain could soon find itself voting to leave the EU.