Better Off Outside? Euro Crisis Fuels Debate on British EU Referendum

By SPIEGEL Staff

With the euro zone apparently heading toward greater integration, many British are alarmed at the prospect of becoming marginalized within the bloc. Euroskeptics see the chance of forcing a referendum on the UK's EU membership and are putting pressure on Prime Minister David Cameron to commit to a vote.

United Kingdom Independence Party supporters demonstrate in favor of an EU referendum outside the Houses of Parliament (October 2011 photo). Zoom
AFP

United Kingdom Independence Party supporters demonstrate in favor of an EU referendum outside the Houses of Parliament (October 2011 photo).

The British seem to have a taste for referendums at the moment. Next year, the inhabitants of the Falkland Islands will vote on their status as a British overseas territory. Then, in 2014, the Scottish government will hold a referendum on independence from the United Kingdom. Now it looks like there could be another nationwide referendum after that -- on Britain's membership of the European Union.

As the euro-zone countries push forward with greater integration as a response to the euro crisis, there are growing calls in Britain for an EU referendum. Prime Minister David Cameron is coming under increasing pressure to agree to a vote, especially from the right wing of his Conservative Party. In a letter sent to the prime minister last week, hundreds of Conservative members of parliament called on him to commit to an EU referendum after the next election in 2015.

The pressure from euroskeptics puts Cameron, who does not want to be rushed into holding a vote, in a tricky situation. In a speech to parliament on Monday on the outcome of last week's EU summit, the prime minister said that although he is not in favor of an immediate referendum on EU membership, he does not want to rule one out for the future. He insisted that the "status quo" was unacceptable in any case. If the euro zone grows ever closer together into a political union, it will change Britain's relationship with the EU, Cameron said.

In an op-ed for the Sunday Telegraph published the previous day, Cameron wrote that "the British people are not happy with what they have, and neither am I." He said he would work toward "a different, more flexible and less onerous position for Britain within the EU," adding that, as Britain gets closer to the end point, "we will need to consider how best to get the full-hearted support of the British people, whether it is in a general election or in a referendum."

Supporters of a referendum argue that although the British already had an opportunity to vote on their membership of what was then the European Economic Community in 1975 (when two-thirds voted in favor), the founding of the European Union and, in particular, the euro zone in the intervening period has changed the community beyond all recognition. It is therefore necessary, they argue, to hold a second referendum.

Exit Seems More Likely than Ever

Cameron has so far refused to commit himself to holding a referendum. He is afraid that his party could be split over the European question again. The endless in-party fighting over the Maastricht Treaty in the 1990s cost his predecessors Margaret Thatcher and John Major power. After taking over his party's leadership, Cameron had initially called on the Tories to drop their obsession with Europe.

As it happens, the current coalition government laid the groundwork for a referendum when it took office. Last year, to appease Conservative euroskeptics, it introduced the so-called Sovereignty Act that stipulates that Britain must hold a referendum if it transfers additional powers to Brussels. The British finance minister, Chancellor of the Exchequer George Osborne, recently said that the new law is "one of the most significant things this government has done." Many leading British politicians from all sides of the spectrum now believe that a referendum on EU membership is unavoidable.

It is entirely possible that the British could indeed vote in favor of leaving the EU. Britain is arguably the most euroskeptic country in the union, with only 17 percent of the British believing that they can trust the EU. But leaving the bloc is something which Cameron wants to avoid at all costs. Despite all the anti-EU rhetoric, he believes that access to the European internal market is a vital pillar of the British economy.

Pro-European voices have warned that Britain is sleepwalking toward a departure from the union. "We are sliding towards the exit without any strategizing about what comes afterwards," Charles Grant, director of the influential Centre for European Reform think tank, told the Reuters news agency.

"The chances of Britain leaving the EU in the next few years are higher than they have ever been," writes The Economist, while the Financial Times wrote that a British exit could be "an entirely plausible side effect of the present euro drama."

Britain's Destiny 'Must Be Made in Britain'

Since the outbreak of the euro crisis, calls for an EU referendum have become increasingly loud, with one recent survey suggesting that around 80 percent of Brits want such a vote. Cameron can no longer afford to ignore the increasing pressure from within the Conservative ranks. The euro crisis has created a new political momentum within the euro zone which Britain needs to respond to, otherwise the country is at risk of becoming marginalized as a non-euro member.

Earlier on Monday, in a speech before the Taxpayers' Alliance, former Defense Secretary Liam Fox, a figurehead of the Conservative right wing, said that he did not believe that "Britain's national interest is served by its current relationship with the EU." The British government, he argued, could not continue to look on while the countries of the euro zone created a "new reality." Britain's destiny, he concluded, "is not a debating issue for leaders on the continent. It must be made in Britain."

In a barely concealed swipe at Cameron, Fox also said: "There will be those who say that this is the wrong time and that it is politically difficult or even impossible. These are the perpetual arguments for inertia."

Cameron, for his part, has tried to appease his critics by promising a tough stance in Brussels. The short-term priority for Britain is to support the euro zone in solving its crisis, he argued in his speech on Monday. A banking union, fiscal union and euro bonds are also in the British interest, he said. But the prime minister said he would not agree to the necessary changes in the EU treaties without gaining concessions in return. The further integration of the euro zone also offers chances for the UK, he told parliament. Britain, Cameron argued, should "take the opportunities (…) to shape its relationship with Europe in ways that advance our national interest in free trade, open markets and co-operation."

Hard Ball in Brussels

By making this promise, Cameron hopes to postpone the referendum issue for a few years. A vote, he said, only makes sense when it is clear what is being voted on. But that is impossible to predict, given the current developments in the euro zone, he said.

German Chancellor Angela Merkel and other euro-zone leaders are unlikely to relish the prospect of a British prime minister who wants to take an even tougher line in Brussels. Cameron already dealt a setback to Merkel's pet project, the fiscal pact, with his veto at the December EU summit.

Cameron also caused problems at last week's summit, dragging out the talks over a trivial detail. The British leader absolutely wanted the seat of the new European Unified Patent Court to be located in London. In the end, Cameron was satisfied with getting two branches for the pharmaceutical and life science industries. "I secured both," he told the British parliament proudly on Monday.

With reporting by Carsten Volkery and Marco Evers

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1. Better late than never
Inglenda2 07/03/2012
To work properly a common currency needs one tax-, one social- and one employment system, but best of all one governing body! The European Union, as it now is, resembles an orchestra in which each musician is playing a different tune. This sort of chaos – especially in the world of commerce - is doomed to fail, but this fact has still not entered the haughty brains of those who rule us. Blair once, amongst many other promises he did not keep, told us he would take Britain into the Euro zone. Had he done so, neither the European or the British economies would be in the mess they now are. By letting Germany take the leading financial role in within those countries using the Euro, we have allowed a communist educated female Chancellor to take over a huge capitalist marketing system about which she understands very little. Germany has become a huge bureaucratic monster, more resembling the GDR than the former Bonner Bundesrepublic. It creates laws and regulations – which the vast majority of voters cannot follow either with their minds, or in practice, instead of restricting its activities to the bare essentials. It is therefore quite understandable when many British subjects are frightened of what might happen should Britain at long last take its proper place within the EU. On the other hand, a whole series of British governments have been pushing their own land ever nearer to the edge of bankruptcy. Could a single European government be any worse? Perhaps instead of all the national governments – who will never all completely agree on one fiscal policy – it would in the end really be better just to have one democratic administration. Alone the money saved, by scrapping all the national governments, would be enough end the current crisis in Europe.
2. Better Off Outside?: Euro Crisis Fuels Debate on British EU Referendum
KhanZubair 07/04/2012
"By letting Germany take the leading financial role in within those countries using the Euro, we have allowed a communist educated female Chancellor to take over a huge capitalist marketing system about which she understands very little." This seems ridiculous. She is the "BOSS" does not mean deciding finance related issues by herself. Expertise routed through Finance Ministry well qualified from Western Germany. UK full involvement in Euro Zone is not a guarantee to resolve the issue. Relative to UK, during past couple of decades, Germany did much better in economics. USA took decades to to be called successful union. If USE (United States of Europe) has to become an effective reality all have to follow the role model of USA.
3. Win-Win
Eleos 07/04/2012
Another win-win situation. Britons would be happier, at least in the short term, outside the Union. Progress in the rest of Europe would be easier without the continual interference and special pleading. In particular it would speed up the imposition of the Financial Services Tax needed to curb the speculation and ease the budget deficits. Further advantages in financial services available to institutions within the EU would encourage migration from the City of London, now being exposed as a centre of dishonesty and greed.
4. Euro in Short Run
sbanicki 07/04/2012
"The crisis in the euro zone may be easing at long last, Standard & Poor’s said, citing the agreements reached last week by European leaders as important steps toward ending the chaos that has led to questions about the very future of the 17-nation currency zone.", Relief May Be In Sight For The Euro Zone, Standard & Poor's Says, New York Times, July4, 2012 Remember, S&P was one of the rating agencies giving bonds backed by sub-prime loans an investment grade rating. It is true that the current chaos may subside as a result of the recent agreements, however, the core issue of creating a political union is unresolved. http://bit.ly/FF1207use
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