EU Referendum: The developments so far

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As most people will be aware by now, the Conservatives pledged to carry out a referendum on EU membership by the end of 2017 in their Election Manifesto. After the General Election victory, the policy was outlined in the Queen’s Speech and since then David Cameron and his key aids have been attempting to renegotiate the UK’s membership deal in order to achieve a vote to remain in the EU.

When will the referendum take place?

The exact date is unknown, however, there are several indictors which suggest a particular date for the vote. On 2nd February, a draft renegotiation package was released – this outlined the changes being proposed to the change in membership deal. Although the details need to be worked out, this suggested we were coming closer to the date for the vote. The Key EU Summit on the UK’s demands is expected to be 18th-19th February where Cameron will hope to make a deal with the EU. If this fails, then it could take place the following month. Providing the deal is reached by March, we will be looking at a referendum in June. Some have reported that the government would prefer 23rd June. The Government will want to avoid July and August due to people taking their Summer holidays and then we reach Party Conference Season. An Autumn/Winter vote is generally less preferred also because people tend not to vote when the weather turns worse and the nights become longer.

What is the government’s position on EU membership?

In January, it was announced that the referendum will be a free vote for the Conservative Party, meaning Government ministers would not have to campaign towards an ‘official line of policy’ or resign if they are not happy. At the moment, David Cameron is campaigning to remain in the EU and is attempted to negotiate a new deal of the UK’s membership in order to gain the support of the country. Officially, ministers have not been fully making their positions clear on whether they support the ‘REMAIN’ or ‘LEAVE’ campaigns. However, Boris Johnson is one high profile figure who might support LEAVE.

What are the arguments to REMAIN in the EU?

It is argued that the UK cannot have an ‘amicable divorce’ with the EU and effective leave then pick and choose what it wants to opt into or out of. REMAIN campaigners argue that Norway and Switzerland both abide to many EU rules despite not being a member of the bloc. Therefore, it makes no sense to leave the EU to carry on being subject to its rules without any influence in the process of making them. REMAIN campaigners warn that negotiations for a free movement deal could take years to negotiate and might not even be guaranteed. Alternatively, going for a complete break from the EU would subject British exports to multiple tariffs and harm the competitiveness of British business.

The impact on business is one of the main arguments advanced by REMAIN campaigners. They state that a ‘Brexit’ would lead to a loss of millions of jobs as global manufacturers would move to lower cost countries. With regards to the overall economy, the Centre for Economic Performance predicts a worse case scenario where the UK loses 6.3-9.5% of its GDP (similar to the loss suffered after the Financial Crash in 2008-9).

There are many more arguments, which will be assessed in future weeks as well move closer to the EU Referendum.

What are the arguments to LEAVE the EU?

Those campaigning to LEAVE claim that Britain could have an ‘amicable divorce’ and keep good relations with the EU despite a Brexit. Campaigners point to the Turkish, Norwegian and Swiss models for a relationship with the EU. The UK could seek to negotiate a comprehensive Free Trade Agreement with the EU, similar to the Swiss model but with better access for financial services and more say over how rules and standards are implemented. Alternatively, the UK could just simply remove ties with the EU and operate as other countries do in the world.

The LEAVE group counteract the economic arguments by stating that there would be a jobs boom, not huge loss. Small to medium sized companies would benefit the most since they often don’t trade with the EU. The Institute for Economic Affairs has rubbished claims that 3-4million jobs would be lost. They stated that the UK jobs market is very dynamic and would quickly adapt to a new UK without the EU. The Group Open Europe also claimed there would be a rise in GDP – a best case scenario of 1.6%.

Once again, there are many more arguments that will be discussed and contrasted with the REMAIN arguments in future weeks.

Have the renegotiations been successful so far?

David Cameron’s demands reached four key areas.

  1. Sovereignty: Cameron wanted Britain to be exempted from the ‘ever closer union’ and withdraw from future political integration in order to retain its sovereignty. With this, he wanted greater powers for national parliaments to veto EU legislation – a ‘red card’ approach. The EU have effectively accepted these demands and allowed the ‘red card’ at 55% rejection by national parliaments in order to bring about a veto of legislation.  However, it’s highly unlikely this provision would even be successful since there would have to be great coordinate for 55% of member state parliaments to reject a piece of legislation. Furthermore, the government failed to get recognition of the UK being part of a ‘multi-currency’ union. Such recognition would have exempted the UK from being drawn into Eurozone crises in the future.
  2. Migrants and benefits: Introduction of a four-year requirement of both living and working in the UK before being able to claim welfare benefits. Cameron also sought that EU migrants would be exempted from claiming any in-work benefits and if job seekers have not found a job in six months, they will be forced to leave the UK. Furthermore, any tax or child benefits should not be sent outside of the UK if the migrant has a family back home. The EU has offered an “emergency brake” which allows the denial of benefits to EU workers for four years if there is excessive strain on the welfare system. Cameron has roughly got what he wanted, however, does this go far enough? It’s unclear how such an emergency brake would work? Who would determine when it can be used or not? Could the EU reject the use of the emergency brake if the UK cannot demonstrate an “excessive strain” on the system? There is also a FAILURE to get the demand regarding the sending home of benefits for migrant workers. These demands, for me, scream compromise. Cameron has not been successful achieving his aims. And it could be argued, his aims were not far reaching enough to begin with?
  3. Currency issues: Safeguarding the UK against Eurozone bailouts and recognition that the EU is a multi-currency union. The EU has not committed to this demand. Perhaps time will tell, but this could be seen as another failure for David Cameron and potentially quite an important one given the recent frequency of bailout deals in the Eurozone.
  4. EU Regulation: Cameron wanted less “excessive” regulation by the EU and extension of the single market. Cameron will probably get what he wanted with this demand since it is uncontroversial and something which other European countries might also agree with. Additionally, it’s something which the public probably will not have an opinion on or particularly care about.

Other implications

David Cameron’s own career will not doubt be on the line here. If he campaigns for REMAIN and the UK votes to leave, surely he won’t be able to keep his job? He will have lost his reputation as a negotiator and leader of both his party and the country. We already know that David Cameron is planning to step down before 2020, so if the referendum result does not go his way, it could be much sooner than expected! Boris Johnson enter stage left to conveniently take his place, no doubt.

There is also the question of Scottish independence which could once again pop up if Scotland votes differently to the rest of the UK. Nicola Sturgeon has already said this would provide a compelling basis for another independence referendum. Tony Blair has also warned that a UK exit from the EU will lead to a Scottish exit from the UK.

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