Leaving the “Ever-Closer Union”: Could Britain Withdraw From the EU?

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Last updated: 31/01/2012 09:08:31

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When: 11-20yrs

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Keywords:

EU, European Union, Europe, Britain, France, Germany, Turkey, Iraq, accession, Treaty of Rome, CAP, EEA, EFTA

Summary

Since the United Kingdom joined the European Economic Community (EEC) in 1973, there have been ongoing divisions over European Union membership, budgets, structures and priorities. Various EU member states have supported different policy priorities and had different views on how to engage with a changing security, economic and political landscape in Europe and worldwide.

This scenario examines the potential factors which might trigger a future UK withdrawal from the EU and the possible implications of such a move. It suggests that if the EU further converges economically and politically, UK political frustration and public euro-scepticism may ultimately trigger withdrawal.

Discussion

Since joining the EEC in 1973 (some 16 years after the founding Treaty of Rome), the UK has had an uneasy relationship with the idea of an “ever closer Union” - though the source of political opposition has often swung between the left and right. Opinion polls have consistently shown scepticism towards EU membership and European integration among the British public. The results of a 2009 survey show that 16 per cent of the pooled population would like to withdraw from the EU, whereas an additional 48 per cent of Britons would prefer the UK to have a looser arrangement with Europe, maintaining free trade and cooperation in some areas, but taking back powers and ending the supremacy of the European court. [1] In addition, when surveyed on the benefits of being part of the EU, nearly half (49 per cent) of Britons expressed the view that the UK has not benefited from being a member of the EU, and only just over a third of those surveyed (36 per cent) agreed that membership of the EU is beneficial to the UK. [2] The British public also shows a strong support for a referendum on further integration with the EU [3] and this support has been intensified by contemporary disagreements over the future direction of the EU.

The Lisbon Treaty provides clarity on the basic priorities of the EU for the immediate future, however, lack of consensus over the long-term future of the EU among EU Member State leaders’ leads to common divisions and disagreements about EU budgets, structures and priorities.

It has recently been amplified further by a series of significant policy differences amongst leading EU member states over the way in which the EU should address the economic and political landscape of a changing, globally interconnected 21st century world. [4]

At the heart of this debate are two main competing models for the future of the EU (based on the welfare models typology by Esping-Andersen) [5] [6]: the ‘Anglo-Saxon’ model and ‘European Social’ model. Traditionally, the UK has favoured the ‘Anglo-Saxon’ model of integration - a broadly economically liberal but politically limited union, focusing on the free trade aspects of European integration rather than closer political union. The ‘European Social’ model, traditionally favoured by France and (to a lesser degree) Germany, are more state-centred, protectionist, and tend to favour greater political union. A third model - the Nordic model adopting the mixed market economy and integration policy, is also important and increasingly touted by European policy makers who see it as a compromise model. [6]

The conflict between these visions of the EU has been brought sharply into focus by the recent enlargements of the EU in 2004 and 2007 - and by the prospect of the integration of further new members - most controversially including Turkey. It can be argued that the UK has always been a strong proponent of greater diversity in the EU and has welcomed widening of the EU, and in this respect, the UK’s re-assessment of the conditions of membership can be seen as resistance to greater political and economical integration. [7]
It is suggested that the current decision-making structure of the EU may not be compatible with such an enlarged union [8] and that the EU member states represent widely different goals, priorities, values and economies. Yet, the economic crisis has brought together EU countries and has facilitated closer cooperation. Response to financial pressures faced by many member states has coerced EU members into an ever closer union by extending Brussels supervision over states’ budgets and expanding the responsibilities of the European Central Bank. To this end, it can be seen as a step towards further economic and budgetary integration, and ultimately, loss of national sovereignty. It is also argued that closer security cooperation might be necessary because of financial pressures. [9] [10]

Attitudes to the EU have long been a cause of friction within party politics. Disengagement has considerable public support but little (openly) in Westminster. [11] Current mainstream political parties are reluctant to talk about the EU withdrawal, but hostility to Europe is one of the few sentiments shared by both some right and left-wingers. [12] [13] If the EU diverges socially, economically and politically from the British vision of the future, frustration of UK political elites with the politics of the EU could combine with the long-standing euro scepticism of the British public [13] [14] to trigger a withdrawal from the EU. [15] On the other hand, current political situation in the UK with no political party with a majority means that the position on Europe has become more complicated. Withdrawal from the EU remains possible at some future time, but highly unlikely.

Implications

The precise impact of the UK leaving the EU could vary enormously according to the precise withdrawal arrangements, while political and bureaucratic machinations of the withdrawal would in all likelihood be significant and time-consuming.

Critics of British membership of the EU argue that the UK could withdraw from the EU and thus be exempt from the Union’s political remit, but maintain economic links with the Union through membership of the European Economic Area and the European Free Trade Association (EFTA), in an arrangement similar to that of Norway. [15]

Advocates argue that this arrangement would be economically advantageous for the UK, pointing out that current average GDP per capita of the four EFTA members is more than twice as high as the EU average and that those countries’ economies enjoy low inflation, low interest rates and low unemployment. On the other hand, EETA members are small, rich countries, and there is no casual effect between their economic performance and membership in the EETA. In addition, as the example of Iceland shows, political and economic freedom can come at a cost. The economic downturn of 2008 had wide and severe consequences for the Icelandic economy, and Iceland has applied for EU membership and is currently in the process of EU accession negotiation talks. [16]

Membership in the EETA would also mean that the UK would be excluded from all EU decision-making, while still being subject to almost all of the EU’s acquis communitaire in order to fulfil the legal requirements to participate in the European single market. [17]

Nevertheless, supporters of the UK withdrawal from the EU provide evidence that the UK could benefit from free movement of goods, services and people, while being exempt from EU legislation. No longer being bound by the Common Agricultural Policy (CAP), fisheries and agricultural regulations could be beneficial to the UK economy as could being able to independently negotiate trade deals with countries outside of the EU. Additionally, the UK could be exempt from European legislation covering a raft of domestic issues, from human rights to social and employment law [15] and this would allow the UK more freedom in an independent foreign policy.

EU critics have highlighted the potential economic benefits of withdrawal. They claim that EU membership costs every Briton £2,000 per year, compared with the £200 quoted by the EU. The “real, underestimated and hidden” costs of EU membership include Britain’s direct contribution to the EU, the cost to UK businesses of complying with and administering EU regulations, EU administration costs and also higher food prices resulting from the CAP. [18]

Conversely, supporters of the UK remaining in the EU argue that in the globalised world, the UK’s economy would be severely weakened economically and in terms of its global influence by not being a fully integrated member of the EU. Foreign direct investment, and the presence of foreign owned firms, have had a beneficial effect on the UK’s national income and constitute a crucial part of the UK’s economic success, [19] and high levels of foreign investment could be threatened by British withdrawal from free access to EU markets. Estimates suggest that trade with EU countries now accounts for over 60 per cent of UK’s trade (compared to 16 per cent for the United States), and 3.2 million jobs, or 12 per cent of the entire UK economy, are directly associated with exports of goods and services to the EU, [20] and any withdrawal could have negative impact on these positions. Economic consequences would also mean a more disruptive split over trade with EU countries, including a possible impact on availability and prices of EU products. [21]

Early indicators

The Treaty of Lisbon, which entered into force on 1 December 2009, outlined the ability of a state to voluntarily withdraw from EU.
Opposition across the EU to Britain’s budget rebate negotiated under Thatcher ministry.
France’s refusal to renegotiate the CAP before 2012.
Diplomatic crisis over the start of accession talks with Turkey in October 2005, with Britain one of the only member states to strongly support the country’s accession.
Continued economic difficulties of continental Europe makes economic rationale of membership less attractive. Recent economic crisis and bailout offered to Greece.

Drivers & Inhibitors

Drivers:
The UK's close foreign policy relationship with the US used to be at odds with the foreign policy of other EU governments.
Continued Euro-scepticism among the UK public.
Refusal to reform economically in order to compete effectively in the global market would inhibit economic recovery in continental Europe.
Continued diplomatic clashes about the structure, financing and future of the EU, now partly overcome by the Lisbon Treaty providing longer term stability.

Inhibitors:
Political balance in EU could alter with changes of government in France and Germany and the accession and increased influence of the Central and Eastern European states undermining the Franco-German axis and sympathising with Britain’s vision of the EU's future.
Rise of China and India as economic powerhouses may make the EU trading and negotiating block more critical to the UK’s economic success.
Threats of an increasingly confident Russia and of Islamic terrorism could make coordinated EU foreign policy appear more attractive.
Practical and legal complexities of EU withdrawal.

Parallels & Precedents

Norway, Iceland and Switzerland’s relations with the EU.
Britain’s opt-out of the single currency and Maastricht Treaty Social Chapter.

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The contents of this paper were provided by the Outsights-Ipsos MORI Partnership. Any views expressed are independent of government and do not constitute government policy.