12 May 2015

After the UK election: what chance of Brexit?

However, it is virtually certain that the question of “Brexit” – Britain leaving the EU – will be put to a referendum of all voters before the end of 2017. The consequences could be dramatic for a country that must attract capital inflows of £100 billion each and every year to pay for its imports.

UKIP (a party dedicated to Brexit) scored 13% of the votes and the Tories (often demanding reforms of the EU that are unlikely) received 37%. This means 50% of voters supported varying degrees of euro-scepticism. On the other side, the pro-European Liberal Democrats sank from 23% of the vote to just 8% - with a catastrophic fall in the number of seats in Parliament. Despite all the furore about this being the most important election for “XX” years, only 66% of the 46 million electors bothered to vote.

By contrast, the Scottish referendum showed what happens when electors really believe their vital interests are at stake: The turnout exceeded 90% in some areas and averaged 84.5% - the highest in any UK election since universal suffrage was introduced in 1918. The task for the pro-Europeans is to engage those 9 million who were non-voters at the General Election – nearly 20% of the electorate – and persuade them that they can aspire to a better life within the EU – and that the obverse is also true: it would be much worse outside.

Voters must have genuine options: a “straight in/out referendum” is a false prospectus. For the UK, a `Cameron re-negotiation’ may well amount to a decade-long road to marginalising itself to the point that is a de facto Out. The referendum must include the option to stay in the EU as it undergoes a major reform along the lines of the Juncker 10-point reform agenda. In the next decade, the euro area will probably expand significantly so the UK will be side-lined and effectively `out’ for the purposes of commercial clout if the relationship becomes one of `opted out’ and sitting ineffectually on the sidelines.

Contents

Public attitudes and Europe...................................................................................................... 2

What “reform” does Prime Minister Cameron actually want from the EU?................................... 3

The European Union has already started a major “reform” programme...................................... 4

The euro area is about to integrate further – and expand.......................................................... 5

An alternative UK-specific definition of “reform”......................................................................... 6

Euro membership: hovering on the horizon?............................................................................. 6

Who will make the pro-EU argument – and how?...................................................................... 6

Timetables for action................................................................................................................ 7

UK economic timetable: the Brexit `boil’ must be lanced........................................................... 7

EU timetable for reform by 2019.............................................................................................. 8

Three Scenarios for PM Cameron’s place in history..................................................................... 8

The full analysis paper and conclusions are available to consultancy clients.

© Graham Bishop