In or Out? How Much? The UK’s dangerous slide out of the EU


So, William Hague, the foreign secretary of the UK has chosen Berlin to make his first EU-related speech as a foreign minister. He will announce that his department will conduct a very broad review of UK-EU relations on six areas: the single market; tax policy; health policy; foreign policy; international development and animal welfare and food safety. Supposedly, these will be analytical reports, not policy papers, detailing how in these areas EU policy affects UK interests.

Déja-vue feelings creep in: remember Gordon Brown’s “five tests” of whether the UK economy is adequately aligned for it to join the Euro? This was also an “analytical exercise” on the surface, but always designed to hide a categorical “no” to Euro accession. So what shall we make of this new exercise, in an environment where Hague also  states that the “sucking in of sovereignty by the EU” is an “democratically unacceptable one-way street”, and that there must also repatriation of decision fields towards the member states? And in an environment where the prime minister has threatened to block the forthcoming EU budget framework 2014-20? And where an increasing number of Conservative Party backbenchers want an immediate referendum on UK EU membership?

It is significant that this first bunch of analyses does not extend to financial services. This is where UK interests are strongest and where its government has not yet answered the question of how consistent its retrenchment agenda from the EU is with maintaining London as the EU’s financial center. They have so far coyly avoided this question – with the exception of David Cameron last year requesting  the UK’s financial center interests to be safeguarded while he opted out of the joint Euro saving plans (together with the Czech Republic). It is clear also to Cameron and Hague that this is where the UK is very vulnerable vis-à-vis the EU.

The Liberal Democrats within the UK government are decidedly pro-European, pro-EU. However, their say on this issue, as on many other ones, seems to be marginal at best. It will be interesting to observe how much influence the LibDems will have on these reports, and whether the question of holding a referendum will surface in or around these reports.

To the long-term observer, this exercise seems to be the formal start of a downhill road which will eventually see the UK either leaving the EU or – more likely – its role strongly diminished. The most recent decisions on the European Stability Mechanism, on a banking union, and others by themselves will lead to a stronger separation between “ins” and “outs” of the Eurozone, where more and more important decision-making will be concentrated on the Eurozone. This by itself will reduce the influence of the “outs”, especially of those countries that will never join the Euro.

The UK’s role in Europe is – once more – at a crossroads. It seems clear that at present – also given the UK governments repeated assertions that the UK economy’s crisis is mainly due to the weakness of the Eurozone countries – a strong majority of the UK’s voters are very EU-sceptical. If pro-EU Scotland would leave the UK, this sentiment would become even stronger. Neither the previous government, and certainly not the present one, have come out in favor of European solutions to the financial and economic crisis. The LibDems’ voice on this is not being heard, only that of the EU-sceptical Conservatives. Pro-European business interests are not heard in public. The Labour Party is rather quiet on this issue, aware that at present no votes can be gained by supporting the EU.

The UK is manoeuvring itself into a corner from which is will be hard to escape. A further withdrawal from the EU will be detrimental to the UK, but also to the EU.

 

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