Britain Enters a Dangerous Period of Uncertainty

It was a lengthy and complete speech when it came. David Cameron sought to encapsulate for continental Europeans Britain’s psychology (or neurosis) about Europe as well as his principles for a reformed EU which, if met, would serve British interests and be deserving of continued UK membership. But he has also opened a period of unprecedented uncertainty about Britain’s future relationship with the European Union. The negative impacts to UK national interests may outweigh the putative domestic political gains that his approach is meant to deliver.

Cameron’s reform agenda

Cameron made a strong case for a Europe that would focus on some of the real obstacles to future European competitiveness, such as further opening the Single Market in services, energy and technology. Efforts to overcome these obstacles have often been blocked by many of the countries that would have benefited the most.

He was right to warn about the loss of popular legitimacy that has accompanied the ever deepening process of European integration and to point to the need to engage national parliaments more actively in the EU process.

And he was correct to note that the response by eurozone members to the continuing crisis that has been exacerbated by an incomplete single currency will require new forms of integration that could spill over into the Single Market and affect the interests of the UK and other countries that intend to remain outside. The UK will need some safeguards about the sanctity of the Single Market.

Cameron also made a strong case at the end of his speech for the benefits that accompany UK membership of the EU and the risks to the UK’s economic prosperity and international influence that it would face should it choose to leave.

There are many on the European continent who would share his analysis, especially on the first two items and the last. The problems for David Cameron and the UK do not lie in his analysis, but in three dimensions.

Repatriation of powers and new safeguards

First, while the essence of some of his proposed reforms will not be shocking to his EU partners, the philosophy behind them is. The UK, says David Cameron, believes ’the essential foundation of the EU is the Single Market.’ There is no appreciation that popular and political consent for the Single Market on the continent of Europe (and among a large segment of the non-Conservative voting British public) rests upon many of the rules that make that market fair as well as efficient. Hence, while there might be flexibility concerning UK demands for the repatriation (or reform) of some current EU powers over common fisheries or regional spending, the same is highly unlikely over the totemic (for many Conservatives) issue of labour laws.

Wider negotiations on a new treaty

Second, David Cameron has built his case for a new European settlement upon the assumption that there will need to be treaty changes to address the new powers he expects eurozone integration to require. But what if eurozone and other EU member states decide to avoid the route of treaty change and thus deprive Cameron of the forum in which to negotiate his new settlement? There is some doubt that Germany might really want a treaty outcome, as it could entrench the sort of transfer union against which many of its citizens are entirely opposed. Even if the treaty route is taken, a revised treaty may not be ready in 2017, the date by which he has committed to hold the referendum.

A loss of influence in Europe

Third, and perhaps most seriously, the UK will lose further influence in decision-making circles in the EU during the upcoming process of internal review and external negotiation over a new settlement. Businesses thinking about investing in the UK may be pragmatic, at least for now, about the cost-risk benefits of whether or not to withhold future investment into the UK. The same cannot be said about EU policy-makers. Why should UK arguments in favour of opening up the services or energy market, expanding trade agreements or sustaining commitments to policies mitigating climate change over the coming years, carry weight with other EU governments if the UK has stated that its membership of the EU is currently conditional?

All in all, the numerous questions that David Cameron raised at the end of his speech about the risks of a UK withdrawal from the EU makes one wonder how a prime minister who prides himself on pursuing the British national interest has ended up potentially gambling those benefits away in an unpredictable EU negotiation and UK referendum process. Polling of the British people in the last two months – after a pro-EU fight back by British business and political figures – has shown a significant swing in favour of remaining inside the EU. These numbers could reverse themselves. But even if David Cameron is successful at some level with his planned EU settlement, will the process of arriving at it really mark the end of British ambivalence about its relationship with Europe?

Dr Robin Niblett is the Director of Chatham House.

This article was originally published by Chatham House and is republished with permission.