Tuesday, March 19, 2013

Britain’s Relationship with Europe – Part 2

Niall Ahern

Part 1 on Britain's relationship with Europe focused on the growing demand for a referendum to be put to the British people sometime after the next election. Since that blog in January, Cameron as predicted, has offered this to the electorate but only if the public votes Conservative and delivers them a majority in 2015. In addition to this, the EU budget negotiations resulted for the first time in a budget-cut. This was something Britain had been wanting all along but which it didn’t believe it would get, even in the days leading up-to the negotiations. However, this hasn’t resulted in any loss of interest on the issue of Europe and Britain’s relationship with it as the more recent Eastleigh by-election demonstrates. UKIP’s second place finish is a classic example of how questions on EU membership coupled with debate about immigration and the free-movement of individuals can be a vote winner. Debates like these clearly demonstrate the greater need to convince the public why it is in Britain’s interests to remain a member. In this second blog, the focus will be on why Britain should remain as part of the EU and what arguments those in favour should be putting forward to voters. Without going into a check list of what the EU has done for Britain over its 40 years of membership, this blog will focus simply on the economic and geopolitical arguments.

Pro-Europeans should be under no illusions, there is a large segment of the British public who have adverse feelings towards the EU and this number is growing. Old technical arguments about remaining in Europe for peace and prosperity do not resonate with the older voters who voted to remain in the European Community in 1975. In addition, this argument does not appeal to younger generations whose history of Europe is very different. At a time when Europe and the UK face their most prolonged economic crisis in their history, debate should instead focus on the economic and geopolitical arguments that will resonate with voters. Economically Britain has much to gain from maintaining its membership with the EU. 52% of British exports go to the EU market and it is by far the country's largest trading partner. Being located so close next to the European mainland is a fact that will never change and Britain has and should continue to take advantage of this fact. Political leaders need to continue telling voters the significant benefits of being located so close to these consumers has on the economy and being honest about the alternatives which as they currently stand, are unattractive offers for the UK. Although almost all the main parties, UKIP included, do not seriously advocate leaving the Single Market. Often those on the right of British politics argue that the UK can leave and still have the same access and rights to this market. They often idealise that Britain can become a Swiss or Norwegian model in North West Europe engaging with Europe through trade and that alone. Yet this narrative is doomed to failure in so much as the Swiss relationship with Europe is unique. It is based on bilateral deals which are complicated, time consuming and to which the rest of Europe would never agree to let an ex-EU member sign up to after it chose itself to leave the club. In contrast, Norway as part of the European Economic Area (EEA) does have access to the internal market (a key area Eurosceptics wish to engage with) however they still have to participate in the EU acquis in particular the four freedoms being the free movement of goods, services, capital and persons. Furthermore Norway has to adopt this legislation but has no say whatsoever at the negotiating table when these laws are created. For a country the size of the UK this would have a significant impact and therefore it is a very unfeasible option for the country and its businesses. The economic reasons for continued engagement and membership of the EU far outweigh any of the other options currently promoted by Eurosceptics.

Staying on the economic arguments, more recently business leaders have started to come out in favour of continued British membership now that debate on membership has really come into question. Although many small and medium businesses also said they would prefer a renegotiated membership, almost all were against the idea of complete withdrawal. It's also vital to put into perspective the actual cost of EU membership to Britain which is significantly lower than many actually believe. At just over £8.91 billion annually it makes up just over 1% of the entire UK budget, very similar to the whole Education Department. The benefits of UK business being part of the EU are estimated to be worth over £200 billion per year and the Department for Business, Innovation and Skills estimates that businesses within the EU trade twice as much with each other purely because of the single market and being able to take advantage of this. Similarly, Vince Cable makes the point that should be reiterated at a time when the UK flirts with the prospect of a triple dip recession. This is that approximately 3.5 million jobs are dependent on the UK's access to, and being part of the single market. Should Britain leave it is very likely that other EU members would not allow Britain to have the same rights or privileges economically that being a member provide. That is the point of being a member of a club - that benefits come out of this membership. The economic arguments for Britain's continued membership of the EU should be reiterated over the next few years as they are a significant reason why it should stay within the EU.

Geopolitically Britain has much to gain from being part of a regional grouping of 25% of global GDP and a population of around 750 million people. On its own Britain has a population slightly under 70 million and economy worth less than 3% of the world economy. Emerging countries economies such as China, Russia, South Africa, Brazil and India stand to overtake the UK by the latter part of this decade. The rise of these emerging nations means they will need and want a greater say and involvement in how the planet is governed. Why is it fair that a small island with a smaller population and economy should get such a significant say in this process and how the world is governed? However, put Britain regionally with the rest of the EU and suddenly its influence and legitimacy is greatly increased. There will always be arguments and issues where time needs to be taken on a policy level to reach agreement across the different member states. Yet Britain’s global ambitions fit more closely to the rest of the EU than many in the press would have Britons believe. Global trade, energy security, immigration, climate change, piracy and peacekeeping require coordinated and joined up responses. Look at the recent interventions in Libya and Mali and you can see European nations with overlapping interests, supporting each other more closely then they have in years. Look at the green arguments taking place across Europe and see that Britain is actually playing a significant role in pushing legislation forward. Geopolitically Britain has much to gain by being part of the EU. Should it decide to leave, it is quite clear to see its interests shrinking dramatically over the next few decades and with it legitimacy to be a ‘global player’ too. Of course, the debate in this sense should come down to what Britain believes its role should be in the world during the latter part of this decade and beyond. If we want to remain a global player, engaged with the rest of the world then the geopolitical arguments are something those in favour should be talking more openly about in the run up to the referendum.

The relationship between Britain and Europe has always been contested and now that there is the real possibility of a future referendum, debates are only likely to intensify. It is encouraging to see that since Cameron's announcement of the referendum some business leaders, politicians and think-tanks have come out in favour of staying. Furthermore, more recent polls following Cameron’s EU referendum pledge have shown a more positive shift on continuing Britain’s membership. By focussing on economic and geopolitical arguments for continued membership there is every chance a referendum can be won. Those in support of this continued membership now need to make this case to the British people and convince them that remaining part of the EU is certainly within Britain’s interests.