Wednesday, February 24, 2016

Europe - In or Out?

The British Prime Minister David Cameron has returned from Brussels with a so-called deal for Britain in Europe. And with that deal under his belt he has formally announced the date of June 23rd for the referendum when Britain will go to the polls to decide whether to remain a part of the European Union or to leave.

With the announcement made both the Stay and Leave campaigns have begun in earnest. However, for many people the facts are unclear and the issue is very much an emotional one or influenced by fears of rocking the boat.  

Pros and Cons

Within hours of David Cameron's announcement of the referendum several members of his party including London's mayor Boris Johnson said they were backing the Brexit campaign.

Boris Johnson insisted that Britain would not lose out should it go it alone and that concerns raised by the Stay campaign amounted to scaremongering.

Questions remain however. Indeed amongst many people there is uncertainty which may prove to be a deciding factor with voters likely to opt for the status quo than risk venturing into the unknown.

There are many pros and cons, but one major factor is how Britain might do financially should it leave.

One of the biggest advantages of the EU is free trade between member nations, making it easier and cheaper for British companies to export their goods to Europe. Some business leaders think the boost to income outweighs the billions of pounds in membership fees Britain would save if it left the EU. The UK also risks losing some of its negotiation power internationally by leaving the trading bloc, but it would be free to establish trade agreements with non-EU countries [The Week].

Even if Britain survived a Brexit, there are concerns both sides of the channel that Britain's quitting its membership could encourage other nations to follow suit with referendums of their own [Telegraph]. This could undo years of work that have brought many nations together. This could hand further advantages of the other trading blocs such as China and the other ASEAN member states, the so-called BRICS and the United States [Guardian / Telegraph]. The risks of contagion are very real indeed [Telegraph].

Flippant responses

There are many who suggest that other non-EU countries have survived without being member states. But the pro-Europe camp often respond with flippant arguments to make their case.

"So what's your alternative?" demand Euro-enthusiasts. "D'you want Britain to be like Norway? Or like Switzerland? Making cuckoo clocks? Is that what you want? Is it? Eh?" [Spectator].

There would likely be turbulence should Britain leave the EU. Many businesses, especially financial ones, may well feel unnerved by a Brexit and may well relocate. But in the long term Britain would likely be able to survive and renegotiate its position since it would remain in everyone's interest to do so.

But how long would such a transition take and what would be the repercussions before stability and certainty is restored?

Ruled by Brussels!

One of the main arguments concerning Britain's membership of the EU concerns European Law.

This is a highly charged and emotive debate. Brexit campaigners often get hot under the collar that 'unelected bureaucrats' in Brussels 'dictate' laws that Britain must follow.

It is of course true to say that EU mandates and law is woven into the very fabric of British law. But it is not entirely true to say that EU law is made by unelected officials any more so than Britain's laws are made by unelected individuals.

The European parliament is made up of both elected MEPs as well as so-called bureaucrats and other officials.

But so too is the British parliamentary system. There are elected MPs, the Lords some of which are essentially unelected - at least by the electorate - and of course there are countless civil servants.

The question should be not so much who makes the laws but whether they are just, appropriate and beneficial.

In fact many EU laws and mandates have benefited people far more than they might presume. For example it has only been through pressure from the EU that mobile operators have been forced to cut the cost of texting and using the Internet on mobiles while roaming [BBC / FullFact].


It is big business that is most concerned by the repercussions of a Brexit. The biggest effect indeed would be a financial one. On the first day of trading after the announcement of the referendum and Boris Johnson's stance on Europe the pound tumbled, hitting a two-year low against the yen [Reuters / FT].

FTSE chiefs have already raised fears concerning the British economy [Sky News].

According to Open Europe, a Brexit could result in a GDP loss by 2030 from 0.8% to 2.2%. Meanwhile, according to calculations made by the Centre for European Reform (CER), the accession to the EU increased British exports by 55%.

Indeed it has to be remembered that the EU is the first economic partner of the UK, representing 45% of British exports and 53% of imports in 2014.

But the biggest worry will be to the City. Currently banks & financial services, including US ones, may operate across EU from a UK base, known as passporting [DLAPiper]. A Brexit would end this without a renegotiation. Hence the recurring headlines warning that big corporations such as HSBC and Deutsche Bank threaten to leave for a European base should the Brexit become a reality [Guardian / Guardian / Guardian].

It is not just single institutions however. The CBI, the Confederation of British Industry, a UK business organisation, which in total speaks for 190,000 businesses, made up of around 1,500 direct and 188,500 indirect members, has also raised concerns [Daily Mail / Telegraph / Guardian].

Meanwhile a report published by Brussels-based CEEMET, an umbrella group which represents 200,000 manufacturers across Europe, has given one of the most pessimistic forecasts of the impact of a possible Brexit. The report - Brexit: A 'lose-lose' situation for EU manufacturers - suggests that reduced trade and weaker industrial productivity could slow Britain's economic growth by 0.5% a year for the next 15 years if it leaves the European Union [Reuters]

Military and defence

There are also concerns over the future of NATO and Britain's position in a Europe-wide defence strategy

Some British military leaders have already warned against Britain leaving the EU [Telegraph].

Meanwhile there are other worries. Would Brexit spell the end of European defence? The quick answer to this question is that Brexit would not spell the end of 'European defence', as broadly understood.

NATO would continue to exist and presumably the US would continue to guarantee the territorial integrity of its European allies. European states would continue to try to protect their own national security and would cooperate within NATO and bilaterally to that end. Thus the EU's Common Security and Defence Policy [CSDP] would continue to exist.

However, Brexit could have serious implications for the UK's role in the world, for NATO, and for the EU [Europpblog / EuropeanGeostrategy

Indeed there are some who fear that leaving the EU could undermine British as well European security interests [Guardian].


One issue that affects most people in Britain is the subject of European travel.

Essentially few things would change, at least on the surface. But costs could certainly go up according to some recent reports with flights being particularly affected [CityAM / Sunday Times].

The British traveller may see a weaker pound in their pockets, but the biggest drawbacks may be when British tourists need compensation of flight delays or when seeking medical assistance.

There has been a long battle to ensure airlines respect the EU directive which sets out requirements for compensation if a flight is delayed, or cancelled, or if a passenger is 'bumped off' a flight. There is the argument that compensation levels are too harsh on the airlines and will push up fares generally. However passengers' rights are now properly enshrined in law thanks to the EU. If Britain left, there would be nothing to stop those rights being watered down once more.

The European Health Insurance Card [EHIC] which entitles UK citizens to free or reduced-cost treatment in other EU countries may also be consigned to history. While it doesn't have the same benefits as proper travel insurance many travel insurance policies will waive the excess payment on a claim. In the event of a Brexit, such agreements would have to be renegotiated and there is no guarantee of the same result [Telegraph].

There is also the issue concerning passports and free movement across Europe. Of course there is unlikely to be any issue about Britons facing restrictions to travel to the EU member states. However it was not so very long ago that Britons driving in some European countries needed an International Driving Permit and it is unclear whether rescinding membership might roll the clock back to those days of the 1970s when travelling to Europe created extra paperwork for those wishing to drive.

Even those who don't regularly drive to the continent could face bigger fuel bills. According to the AA, a Brexit could add a wallet busting £494 a year to a two car family's fuel bill as motorists pay the price for a weaker pound [Mirror].

And what of those British expats who benefit from Britain's EU membership. The uncertainty over work permits, pension entitlements, healthcare and other issues has prompted many to consider dual nationality. And it's not just Brits living in continental Europe. There are countless numbers of Europeans living in the UK who are just as concerned for the future.

It is estimated that the consequences of a Brexit would affect 2.4 million EU citizens living in the UK and also the estimated 2 million UK citizens living in Europe. While it is unclear what will happen, many of these people are not leaving their livelihood to chance and are now applying for dual citizenship [UnlockTheLaw / Guardian].

European reaction

There has been some consternation amongst some European politicians over a possible Brexit with some expressing an almost indignant response.

Some have given veiled threats of punishing the UK [Daily Mail].

And there have also been some who have expressed a view of 'good riddance'. But while there may be some bad blood, at the end of the day Europe needs Britain as much as Britain needs Europe [FT].

So how will Brits vote in a little under 4 months? Polls aren't always reliable, though they do provide some indication as to the way the vote may go. Most recent polls show the public split at roughly 50:50. A poll of a small number of individuals conducted by tvnewswatch indicated that 30% were undecided and only 20% said they intended to vote to leave. The remaining 50% sided with the decision to remain part of Europe but were nonetheless unhappy with some issues such as immigration and the amount of money paid by Britain to be part of the EU club. However depending upon which media you watch or read will depend on whether the slim marginal swings are interpreted as a move towards a Brexit or the status quo [Express / Telegraph / Telegraph].

Just as with the run up to a general election there will be much backbiting, debate and argument leading up to polling day.

Whichever way the vote goes one can be certain that the arguments will continue.

tvnewswatch, London, UK