British prime minister David Cameron has promised an in-out referendum on the UK’s continued membership of the European Union (EU) before the end of 2017. The vote to either leave the EU or stay is dependent on his Conservative party winning the next general election, due to be held in just over two years’ time. The consequences of any possible EU exit for treasurers in terms of tax laws, the jurisdiction of EU-wide laws, not to mention more generally in terms of jobs, investment and economic prospects for the UK, are profound.
In his much-anticipated speech, postponed because of the hostage drama in Algeria, David Cameron said that the Conservative party manifesto for the 2015 general election will ask for a mandate to negotiate a “new settlement” for Britain in Europe, which will be put to voters in a referendum within the first half of the five-year Parliament.
Cameron also, however, pledged that he would campaign “with all my heart and soul” for the UK to remain an EU member when the referendum takes place and added that a decision by the electorate to withdraw would be “a one-way ticket, not a return”.
The prime minister acknowledged that public support in the UK for the EU was “thin” and concern over the lack of democratic accountability is “particularly acute”. However, a vote now between the European status quo and departure would be “an entirely false choice”, as the EU is set to be “transformed perhaps beyond recognition” over the next few years by measures needed to save the euro single currency.
Reaction to Possible UK Exit from EU
Commenting on the PM’s speech French foreign minister, Laurent Fabius, said: It could be dangerous for the UK itself because the UK outside Europe? Difficult. The other day I was at a meeting with lots of British people, in particular businessmen, and I told them cleverly that if the UK decides to leave Europe we will roll out the red carpet.
“We want the British to be able to bring all their positive characteristics to Europe… but you can’t do Europe a la carte. I’ll take an example which our British friends will understand. Let’s imagine Europe is a football club and you join, but once you’re in it you can’t say, ‘Let’s play rugby’.”
Pierre Moscovici, the French finance minister, was less critical and said that the UK had always been a “particular” but “extremely useful” EU member. “The European spirit is also to respect diversity. I support one Europe and one Europe that is differentiated, one Europe where some can advance more quickly than others,” he added. Other critics suggested that Cameron was proposing a “28-speed Europe” and that the UK was attempting to impose its own rules on the rest of the EU.
Even Cameron’s own partner in the coalition government, Liberal Democrat party leader and deputy prime minister, Nick Clegg, who is noted pro-Europe politician, attacked the offer of a referendum in 2017 for opening up the possibility of “years of grinding uncertainty” about Britain’s future EU membership. Many commentators have pointed out that corporations looking to invest in Europe and comply with the European-wide regulations enforced by the EU as part of the single market, may be put off by the continuing uncertainty about whether Britain will remain in the trading block. Foreign direct investment in the country may suffer if, for instance, a South Korean firm looking to open a European manufacturing plant is unsure about the UK’s position; uncertainty being a catalyst for business caution. As Clegg himself said in Parliament: “My view is that years and years of uncertainty because of a protracted ill-defined renegotiation of our place in Europe is not in the national interest because it hits growth and jobs.”
Davos Attendees React
Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, Peter Sands, the chief executive officer (CEO) of Standard Chartered Bank, said to Bloomberg TV at the event: “My feeling is that the UK needs to remain part of the EU. I completely understand why Prime Minister Cameron thought it necessary to offer the people a referendum. Europe is changing, and as the biggest country in Europe outside the eurozone, the UK’s relationship with it is going to change. I think it’s kind of inevitable that something like this had to happen.”
“The EU has been a massively important creation within Europe. It is very good for the UK to be part of it. It will evolve. We have seen that already in the eurozone. It is changing quite markedly. It is not a bad thing to have the evolution, debates and questions.”
Sands went on to warn, however, that, “a lot can happen between now and then in terms of the tenor of this debate”.
The Swedish Finance Minister Anders Borg, also talking to Bloomberg TV at Davos, commented that he had met his colleague, the UK Chancellor, George Osborne, last week when David Cameron’s impending speech was discussed. “For us, this is a big risk,” said Borg. “We don’t want to see the UK outside of Europe. The Swedish banks are re-financing through London. You cannot have one legal system for banking and industry. Our multinational companies are doing most of their banking through London for them too if they want to be competitive in the world market and safe it is very difficult to have their banking business outside of the EU and their customers inside of the Union, so it’s very important for us to keep the UK in the EU.”
Borg’s boss, the Swedish Prime Minister Fredrik Reinfeldt, speaking later on, backed this viewpoint by saying that he looked upon David Cameron’s initiative, as a way “how Britain can remain inside the EU, which is of vital interest I think, both for Europe and for my country, Sweden”. Speaking about the rift between debt-laden southern Europe and northern Europe within the EU, he went on to add: “We are very divided in Europe. Sweden has a very strong public finances. We have been in the reform process for over 20 years. That is very true for most parts of northern Europe. Then we have a different situation in southern Europe, where there is still a huge need for reforms and they’re pushing them through. They have started and have much more to do. So there’s a clear division of what you see in Europe. We’re also affected by the fact that demand on export goods have gone down. And of course if you look worldwide you will find that other parts [of the globe] are going better. But they’re not as highly developed as Europe, so they are in the earlier stages [of economic development]. I’ve listened to people in India talking about still 70% of the population being in the rural farming industry, and of course, that is quite some time when you look at Sweden and Europe.”
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