A remarkable political consensus is emerging both within Britain and across much of the European Union that the UK is heading inexorably towards withdrawal from the EU. Opinions differ about the speed of a potential British exit and also about precisely what new relationship London expects to negotiate with the Union in the longer term. But, reluctantly, even Britain’s EU partners are coming to realise they may not be able to prevent a slippery slide by the UK out of the Union.
The abortive European Union budget summit last week showed that the divisions over the size and policy priorities of the seven-year EU budget ran deeper and wider than just the British government’s obdurate demand for a total freeze. But the German Chancellor, Angela Merkel, and her colleagues succeeded in averting – for now at least – the British Prime Minister, David Cameron, ending up in an isolated, veto wielding, minority of one.
Cameron himself returned to London to enjoy the rare experience of hearing his praises being sung by his hard-line Euro-sceptic Tory critics in the House of Commons. But they, and he, know that the budget acrimony in Brussels was only a minor skirmish in a much bigger struggle likely to develop over the coming months. The ultimate battle will be over whether the UK can achieve a root and branch renegotiation of the terms of membership of the Union or whether it will have to go for outright withdrawal.
The stridency of the Euro-sceptics is fuelled, in part, by their fear of the UK Independence Party which is winning over significant numbers of their Tory voters and in part by recent opinion poll majorities in favour of UK withdrawal. Already some Tory leaders are pleading for “an electoral pact” with UKIP to try and minimise what otherwise may be a dramatic loss of seats in the next election.
When the EU budget negotiations resume, Britain’s partners may be less tolerant of Cameron’s veto threats. They may even opt for an emergency one year budget – which will fall short of the freeze Cameron seeks – and only return to negotiate the seven-year budget proper when it is clearer whether the British really are on their way out of the Union.
The next test of the British government’s intentions will come at the European Council on December 13/14. Heads of government will consider proposed EU Treaty changes designed to implement banking, fiscal and, eventually, greater political union for the Euro-area. Bizarrely, the British government has declared itself strongly in favour of much closer Euro-area economic and fiscal union as necessary to avert a further worsening of Britain’s economic crisis. But such integration, Cameron will insist, cannot apply to Britain.
London is ready not to veto Euro-area banking and economic union on two conditions. There must be guarantees that UK (read the City of London) must not be adversely affected by decisions of the new Euro-area governance. Secondly the EU must agree to negotiate a wholesale recasting of the terms of Britain’s membership. The UK would then pull out of a range of EU policies including justice, crime, immigration and social rights policies. It also wants to be free to pick and choose (and change its mind) on what in future it wishes to be involved in and what not.
David Cameron would then recommend such a radical recasting of the foundations of Britain’s EU membership for approval in a referendum to be held after the 2015 election. In this way London hopes to maintain the appearance of a formal – but very peripheral – membership of the Union. None of Britain’s partners want to see the UK depart but no one believes that a phantom version of membership designed only for the UK would be workable. Without such an agreement however Cameron may agree to an In/Out referendum even before the 2015 general election fearing that otherwise his party critics might force him out of 10 Downing Street.
Most Tory Euro-sceptics are unconcerned about an eventual total withdrawal. Outside, they believe Britain could negotiate a satisfactory new external relationship with the EU. They have in mind arrangements made between the EU and both Norway and Switzerland. But when they examine the fine print of these arrangements they may seem less appealing. Norway has to make hefty financial payments to the EU budget and is obliged to accept all the EU’s decisions affecting the running of the European single market. Switzerland is also bound by EU regulations on all its separate agreements with the Union – and like Norway without having any say in shaping them.
There is much brave talk in London about the UK being free to pursue its global trading mission. But since Britain exports more to Ireland than it does to China, big business in the UK is increasingly alarmed about the direction of government policy on Europe. Meanwhile, across the Atlantic, the Obama Administration views with concern a widening rift between Britain and the EU. Outside the Union, the so-called UK/US “Special Relationship” could suffer.
How Cameron’s high stakes poker game with the EU plays out at home remains to be seen. Anxious voices are already being heard in Scotland and Wales and across the community divide in Northern Ireland about the serious impact which an EU budget freeze – let alone withdrawal from the EU – would have on the flow of funds from Brussels. No one knows how UK disengagement from the EU might influence the planned referendum on Scottish independence. Could an independent Scotland opt to stay in the EU?
Cameron has so far has had little reason to worry unduly about pro-European opinion in Britain, marginalised as it is by an overwhelmingly Euro-sceptic media. The pro-European Liberal Democrats are politically neutered within the coalition. The Labour Party wavers between defending Britain’s EU membership and playing political games in alliance with the Tory Euro-sceptics to embarrass Cameron. Only if the pro-European forces across British society can mobilise an unprecedented fight back can the slide to withdrawal be reversed.