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Debates

The UK and Europe

Separation or divorce for the UK and the EU?

Michael Geary and Kevin Lees / Sep 2013

The UK Prime Minsiter, Davd Cameron. Photo: Wikimedia Commons

Even as the European Union struggles to contain the fallout from an existential Eurozone crisis that, four years on, is showing some signs of abating, EU leaders from Brussels to Berlin have already begun grappling with the next existential crisis: the looming question of renegotiation with the United Kingdom and the promise of a UK referendum on EU membership sometime within the next half-decade. 

But as European citizens ponder the consequences of whether the British people will vote to end what's been a dysfunctional four-decade relationship with the European Union, the question of whether Britain is going to leave the EU has become redundant -- Britain, in many ways, has been leaving the Union since virtually the day it became a member.  Accordingly, the real question for British and Europe is whether the British will opt for a separation or for a divorce. We argue that separation, a detailed membership renegotiation, is the better option for both sides rather than a complete exit.

Ideally, Britain always preferred a European-wide free trade area without the accompanying supranational institutional apparatus, and that was true even before Britain sought EU membership.  London proposed a free trade area as early as the mid-1950s that won German support at the time, although France later rejected the more limited FTA concept in favor of the more wide-ranging vision of Jean Monnet and Robert Schuman.  Nonetheless, London has always viewed the EU first and foremost as an investment opportunity to expand its markets and exports.  France, Germany and other EU member states regard the integration process as something far more important: a motor of peace and stability, and it's precisely that vision that caused the Nobel Committee to award the Peace Prize to the European Union in 2012.  While the European Union has made real gains in pacifying the continent by extending democratic norms and establishing links with, first the former Mediterranean dictatorships in southern Europe, then the former Soviet satellites in central and eastern Europe in the 1990s and 2000s, British policymakers hardly believe that it's the acquis communautaire that's kept Western Europe at peace since the end of World War II. 

Back in January, when British Prime Minister David Cameron delivered his long-awaited speech on Britain’s future relations with Europe, he stressed that London wished to remain at the heart of the Single Market and he argued in favour of a European family of nations, echoing a theme frequently championed by one of his predecessors, Margaret Thatcher.  Moreover, he called for an end to ‘all this talk of two-speed Europe, of fast lanes and slow lanes, of countries missing trains and buses, and consign the whole weary caravan of metaphors to a permanent siding.’  While professing respect for the rights of other EU member states to pursue ‘ever closer union’, he made it clear that 'for Britain – and perhaps for others,' ever closer union is decidedly 'not the objective.’  Voicing British dissatisfaction with Brussels's encroaching role in shaping domestic social and economic policy, and under some pressure from a majority of his Conservative backbenches, Cameron vowed that the 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.’  Thereupon, Cameron promised, his government would put the resulting deal to the British public in an ‘in or out’ referendum in order ‘to settle this European question in British politics.’

Despite periodic public displays of marital discord, Britain and the European Union have remained together for 40 years. Yet this is not the first time in this relationship, one of the sides has sought to re-write the marriage vows.  Cameron made clear to the rest of Europe his determination to renegotiate Britain's terms of membership.  His original plan foresaw holding a referendum on continued membership halfway through the next British parliament, conveniently well after the May 2014 European Parliament elections, a September 2014 referendum on independence in the more relatively pro-European Scotland and, of course, Britain's next general election in May 2015, thereby assuaging the concerns of his restive Conservative faction in Parliament.  But much has changed for Cameron since January, and while he must still worry about dissatisfied Euroskeptic Tory backbenchers, a groundswell of more general public discontent with Europe and, indirectly, Cameron's own government, has boosted the support of the United Kingdom Independence Party (UKIP), which threatens to turn the European elections, the Scottish referendum and the next general election into successive proxy battles over the EU membership question. 

London's move came with a palpable sense of inevitability that stems not just to May 2010 when the Conservative regained power but far beyond, back to the earliest days of prime minister Tony Blair's 'New Labour' government in the late 1990s when then-chancellor Gordon Brown rejected the British adoption of the Euro. But the anti-Europe momentum has surged within the past three years, as both the Conservative Party and British society in general has grown increasingly Eurosceptic, engulfed by concerns that Central and Eastern Europeans are putting British jobs at risk and fears spawned by the ‘Eurozone crisis’ that ‘Europe’ just doesn’t look like a going concern.  Furthermore, UKIP's startling rise has forced not just Cameron, but the entire political spectrum, including Labour's new leader Ed Miliband, to adopt a more hardline position on issues linked to immigration.  Though Britain remains unique in that, unlike most other EU members (and even some non-members like Switzerland, Norway and Iceland), it is not a member of the Schengen Area and therefore maintains control of its borders, the free movement directive of the EU's Single Market legally prohibits London from denying EU citizens the right to work within Britain.  That, one suspects, is at the top of the list of the powers that Cameron presumably hopes to claw back from Brussels, although it remains unclear what else he would like to renegotiate -- or even what he believes is sufficient to warrant a ‘Yes’ vote in his planned 2017 referendum.

But stormy as the next four years promise to be -- for London no less than the rest of Europe -- the entirety of the past 40 years of UK-EU relations is a turbulent narrative, and Cameron’s speech is only the latest chapter in a story that is unlikely to end happily ever after.  British relations with Europe have always been troubled, and even the British accession to what was then the European Economic Community was poisoned with original sin.  Denied membership to the EEC twice during the 1960s by the recalcitrance of French president Charles de Gaulle, Britain finally gained membership in 1973 after months of protracted negotiations between pro-European Conservative prime minister Edward Heath and de Gaulle's successor, Georges Pompidou.  But almost immediately after British accession, cracks appeared in the relationship.  Indeed, if Cameron's latest gambit has a sense of déjà vu to it, it is because it comes almost directly out of the political playbook of former Labour prime minister Harold Wilson.  Just one year after Heath secured British EEC membership, Wilson made the renegotiation of British membership the centerpiece of Labour's 1974 election manifesto and promised, if elected, to hold a referendum on whether Britain would remain in the Community.  Wilson’s party, like the Tories in more recent decades, remained hopelessly split on the ‘Europe' question, and seven of Wilson's cabinet colleagues openly pushed for a ‘No’ vote.  Although Britain's original nation-wide referendum on EEC membership ended with a comfortable 'Yes' vote in June 1975, it came only after Wilson negotiated generous additional monetary payments from Brussels through the Community’s Regional Policy.  So while Britain avoided an annulment of its recent new partnership with Europe and home Secretary Roy Jenkins claimed that the result ‘puts the uncertainty behind us,’ his words rang hollow even at the time.  

Britain’s relationship with its European partners deteriorated further when Margaret Thatcher entered No. 10 Downing Street in 1979.  Thatcher was determined to confront what she viewed as the excesses associated with Britain’s annual contribution to the Community’s budget and EEC spending, especially with respect to what she saw as the wasteful Common Agricultural Policy.  After years of bickering with other European leaders, including West German chancellor Helmut Kohl and French president François Mitterrand, Britain secured a permanent budgetary rebate at the 1984 European Council summit.  Nonetheless, Thatcher continued to clash with European Commission President Jacques Delors throughout the 1980s over his attempts to advance European integration at the expense of national sovereignty.  Fears from within even Tory ranks that Thatcher had overreached with her  famous 'No, No, No' speech contributed significantly to her downfall in 1990, though her successor John Major had an equally troubled relationship with Europe, especially after the Maastricht Treaty entered into force in 1993.

With recent, raw memories of the painful 1992  'Black Wednesday' sterling crisis that led to British withdrawal from the European Exchange Rate Mechanism, Major had little appetite for further economic and monetary union, and the increasingly Euroskeptic Tory backbenches had even less.  So when Blair swept to power later that decade, it was no surprise that then-chancellor Gordon Brown ratified Major's original decision, establishing five ‘tests’ in order to give up the British pound -- tests that almost certainly would not be met.  Brown betrayed his diffidence regarding the single currency with his first major policy as chancellor -- delivering monetary independence to the Bank of England, a move that telegraphed that he did not foresee Britain transferring UK monetary policy to the European Central Bank anytime soon.   The two-tier Europe that was already emerging in the 1990s became an enshrined reality by the early 2000s, by which time Britain had not only opted out of Eurozone membership and scoffed at a unified European foreign policy, but had also rejected the Schengen Agreement on the removal of border controls with the rest of the European Union.  

Having spent decades with Britain labeled as the “reluctant European,” British ministers sat uncomfortably around the EU table as an increasing number of decisions have been taken by qualified majority voting, leaving British diplomats with less leverage in Brussels than ever.  When Cameron vetoed the amendment of existing EU treaties to tighten the largely toothless revision of the Stability and Growth Pact that German chancellor Angela Merkel championed at the end of 2011, Merkel effected an end-run by negotiating a 'fiscal compact' that every other EU member signed, except Britain and the Czech Republic.  Though Cameron's move marked the first time that Britain vetoed a European treaty outright, it hardly felt like a watershed moment in British-EU relations.  Instead, it was just another example of the increasingly familiar British opt-out.  Deeper political, fiscal and banking integration, even in an effort to save the Euro and forestall a financial crisis that could leave Britain in an even deeper recession, was always going to spook Cameron’s Tory backbenchers.  After having avoided the straitjacket of a one-size-fits-all monetary policy, no British prime minister could reasonably renounce sovereignty over fiscal policy as well.

It's not unfair to ask if Britain hasn't been 'leaving' Europe in slow-motion all along:  Limited initial British appetite for a federal Europe.  Wilson's 1975 referendum feint.  Thatcher's budget rebate.  Major's refusal to sign up to the Schengen Area.  Brown's convoluted rejection of the Euro.   Blair's rupture over the U.S. invasion of Iraq (and an EU-wide foreign policy).  And now, Cameron's veto of the EU fiscal compact.  What's interesting is that, even if Cameron doesn't survive the 2015 general election, and if Britain never holds a referendum on EU membership, Britain is already heading for a kind of separation from Europe as economic and financial mechanisms take greater priority within the European Union.  Even as Eurozone members accept that deeper fiscal union is necessary to make the single currency workable, it is unclear that in the reality of today's 'multi-speed Europe', Cameron would need to renegotiate anything with Brussels in order to retain the fiscal prerogative at home.  With Britain having asserted London’s right to opt out time and again from new European measures, it's not clear whether a formal rejection of EU membership is even necessary to continue what's already become stet crawl toward ever-further separation.

Merkel, who wants a new EU treaty granting greater fiscal control to Brussels and, in no small part, to Berlin, might be willing to trade more opt-outs to Cameron in exchange for his acceptance of further integration of the core Eurozone countries.  Negotiations would not begin in earnest until after Cameron's reelection in 2015, which remains a questionable proposition at best. However, if Merkel and French president François Hollande balk at Cameron's push for a major repatriation of powers from Brussels back to London, will it be enough to satisfy British Euroskeptics if Cameron manages to, say, renegotiate an opt-out from the EU's directive on working hours?  Or perhaps he might succeed in repatriating additional judicial powers from Brussels?

Yet another problem, as Europe has discovered painfully over the past four years, is that there are precious few ways to ratchet back the forward march of integration -- the process does not come with a reverse gear.  Even while it remains unclear what Britain wants to renegotiate, the core of Cameron’s speech reiterated the importance of the Single Market, which gives Britain access to an expanding market of over 500 million people in exchange for certain conditions, such as the right in principle of EU citizens to free movement across the 28 member states that also includes the right to work and claim benefits.  It is, therefore, unclear how equitable it would be for Merkel and other EU leaders to continue to provide Britain access to all of the benefits of EU membership with none of the sacrifices -- there's a breaking point at which British opt-outs and its semi-insider status would undermine the entire system's integrity. 

This leads to the ultimate question of a divorce. The Treaty of Lisbon, which took effect in 2009, makes provision for how a member state can leave the European Union.  Article 50 states that ‘any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.'  After such a determination, perhaps following the victory of a 'No' vote in Cameron's mooted referendum, the European Council would negotiate and conclude an agreement with Britain setting out its new relationship with the EU.  Despite the inclusion of the mechanism for voluntary withdrawal, however, the exit of Britain -- currently the second-most populous country and the third-largest economy in the EU -- would be a massive trauma to the cause of European integration. Although Greenland, an autonomous country within the kingdom of Denmark, left the EEC in the 1980s over fishing rights, there is no precedent for how a country with over 10% of the EU's population would exit.  The resulting rebalance of the European Union would shift its nature, tilting the balance of power titled away from 'Northern Europe' and toward 'Southern Europe.' International investors would certainly become more skittish, not only with regard to Britain, but to the European Union more generally. It would also establish a precedent that Brussels would prefer to avoid at all costs, lest the British example inspire additional hold-up negotiations in the future. 

A formal withdrawal would cause serious and immediate problems for the British economy, and its trade and commerce with Europe.  British officials working in EU institutions and agencies would likely lose their jobs.  London, as a capital of European finance, would recede in importance to Frankfurt and Paris.  British exports to the European Union, worth £324 billion in 2011, would be disrupted unless London found a way to negotiate a free trade deal with the EU along the lines achieved by South Korea, Norway and Switzerland -- and that would depend on the goodwill of Britain's scorned former EU partners and the amicability of the breakup.  The EU referendum has already given Scots cause to worry and a formal rupture could accelerate the collapse of three centuries of union between England and Scotland, leaving an isolated England even without the profits of the North Sea oil. A divorce would almost certainly exclude Britain from the Transatlantic Trade and Investment Partnership (TTIP), a major trade pact currently being negotiated between the EU and the US. A comprehensive trade deal would net the British economy about £10 billion annually and create thousands of extra jobs in the long term. While the United States has been keen to stay out of the latest round of EU-UK marital strife, Obama administration officials have made it clear to London that an exit from the EU would also close the door on access to the TTIP.

So with British public opinion increasingly inclined to leave the European Union, it is even more important to frame the question of Britain's relationship with Europe in realistic terms, however difficult that may be to accept.  While the terms of separation of British association with many core aspects of the European Union may be difficult for European leaders to stomach, it may be the best alternative to a more formal divorce that seems likely to happen if policymakers in London, Brussels and Berlin continue to deny the reality that British-EU relations will never be -- and never have been -- amorous.



Michael Geary

Michael Geary

September 2013

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Kevin Lees

Kevin Lees

September 2013

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