19 October 2012

Philip Stephens: Brexit - Europe loses patience with London

Mr Cameron is said to be drawing a road map for Britain's future in Europe. He has failed to notice that, as they strike out in the other direction of closer union, his partners are content to say goodbye, writes Stephens in his FT column.

Europe has tired of London’s demands for exemptions and opt-outs from the rules of the Union. Other leaders have serious business to transact to rescue the euro. If Britain wants out, continental politicians are now heard to say, it should get out.

The prime minister promises a “big speech” on the subject sometime soon. He wants to set out the terms for a new relationship. The plan is to negotiate a series of concessions as the price for British consent to the treaty changes the euro group will need for deeper integration. The package could then be put to the British people in a referendum.

There are several snags to this scenario. The most obvious is that the government is running out of things from which to “opt out”. It is outside the euro and, unlike say Poland, has no intention ever of joining. It has declined to be part of a fiscal pact or banking union. Mr Cameron wants a two-tier budget to separate Britain’s contributions to Brussels from eurozone spending.

Another problem lies in the presumption that others will be malleable. In truth, the veto has lost its potency. When Britain deployed it in December last year, eurozone leaders simply created a parallel structure for fiscal cooperation. In France there is positive enthusiasm for such an approach. Germany would once have made an effort to accommodate British exceptionalism. But Ms Merkel has lost patience.

She is far from alone. Mr Cameron has ignored overtures from Mario Monti, the Italian prime minister, for closer cooperation in single market policy. Mariano Rajoy, the centre-right Spanish leader, looks to Berlin rather than London. François Hollande, France’s Socialist president, was never going to be a close chum. Britain’s point-blank refusal to contribute to any of the support mechanisms for the euro has baffled even close allies such as Sweden. Others confess they are tired of British lectures about how they should order their affairs.

There have been many crises in Britain’s relationship with the EU. This one feels very different. The arrangements for banking regulation may provide a template for a new institutional architecture that effectively excludes Britain from decision-making across the single market. The consequence would be to leave Britain in a position not dissimilar to that of EU outsiders such as Norway and Switzerland – bound by the rules and to pay their dues but unable to shape anything.

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