16 May 2013

Graham Bishop: UK Referendum on EU - Cameron 'relaxed' that 114 Tory 'islanders' rebel

The Leader of the Conservative Party declared himself “relaxed” about the possibility that a sizeable number of his backbenchers would express their disagreement with his EU referendum policy. In the event, 114 Tory `islanders’ effectively voted against their Party Leader – more than half the Parliamentary Party (if ministers are excluded). It is now clear that the UK will have to hold a referendum on EU membership. The only questions are: when, and under what circumstances?

Everyone across Europe seems united that the EU needs continuing `reform’. Most `mainlanders’ however seem to define this rather differently from the 114 `islanders’ who voted last night for a UK referendum. The `mainlanders’ are in a continuous process of 'reform’ towards deepening the single market for decades to come but their definition of 'reform’ means more Europe - not less.

In the shorter term, the eurozone portion of the EU is in the midst of fundamental change as it responds to the euro crisis. As the process moves to completion, the UK will be progressively marginalised to the point that, for commercial purposes, it may have 'left’ the EU anyway. The lifetime of the next UK Parliament is likely to be the time when Britain really does have to make a decision about being an active part of an integrated European system – or not.

It will, therefore, be appropriate to ask the British people directly whether they want this marginalisation and de facto exit. The only question is whether investors – both commercial and financial – will allow the huge uncertainty to drag on for years into the next Parliament. As the other sick men of Europe take their Thatcherite medicine and recover, investors may demand a quicker answer from the remaining sick man about whether he is going to shoot himself in the foot instead. A classic sterling crisis could precipitate matters rapidly.

Download full text as PDF link

© Graham Bishop