On June 23rd the British public will make a decision that could alter the fate of Europe in a referendum on whether the UK should leave the EU. Despite returning from Brussels negotiations having secured Britain a ‘special status’ in the union, including an emergency brake on welfare payments to EU migrants, protections from eurozone regulations for the City and an exemption from the EU’s ideal of an ‘ever closer union’, Prime Minister David Cameron has a fight on his hands, with several of his cabinet ministers actively campaigning for an EU exit.
The decision to hold a referendum is the governing Conservative Party’s response to the rise of the UK Independence Party (UKIP), a Eurosceptic party that went from being a fringe party to being a political force, winning the most votes in the European elections and becoming the third biggest party in the most recent general election.
The ballot is expected to be tight. And how Britain votes could ultimately come down to the irrational impulses of the day. With the vote scheduled just days after the Euro 2016 football tournament group stages, it has been speculated that the future of Europe could come down to whether the England football team put in a performance against Wales, Russia and Slovakia – research has found that a local sports team victory in the days leading up to an election boosts the incumbent vote share by a significant margin. It could be that a strong performance from England increases the country’s hopes for the future and the spectacle of European countries engaging in friendly competition fosters a greater appreciation for European culture and values – a shared sense of European-ness. A poor performance, however, could inspire soul searching and a questioning of England’s position in the status quo.
A decade ago the idea that a country might decide to leave the EU would have been considered absurd. But since then, two developments have come to the fore and will dominate the referendum debate in the months to come – the eurozone crisis and the ongoing refugee crisis.
The Eurozone Crisis
Paul Krugman is not alone among economists in arguing that it has been obvious for some time that the creation of the euro was a terrible mistake. Economists argue that Europe has never had the preconditions for a successful single currency. And yet the single currency was introduced anyway.
Under the Stability and Growth Pact, which was engineered to enhance fiscal discipline, eurozone countries had been obliged to keep sound fiscal policies, with annual deficits limited to 3% of GDP and debt limited to 60% of GDP, and yet these rules were completely ignored in the absence of any political will to enforce them. After the credit crunch took hold, attention turned towards excessive government borrowing in peripheral euro area countries, leading to spikes in interest rates on government bonds. Of all the eurozone economies, Greece was by far the worst-hit. Without the ability to devalue its currency Greece has been subjected to one of the deepest and longest-lasting recessions on record, and even after years of crisis, Greece – and the rest of the eurozone – faces sclerotic growth for the foreseeable future. Meanwhile, GDP growth in advanced European economies outside the eurozone has been relatively robust.
The failures of the euro have led people to wonder if the Eurosceptics were right. To them it seems obvious that if the EU is capable of making such a colossal mistake on a matter as important as a currency, it shouldn’t be trusted with anything at all.
The Refugee Crisis
Cameron’s “no ifs, no buts” promise to reduce net migration from over 200,000 to the tens of thousands lies in tatters – net migration instead climbed to 323,000 in the year to September. And where does most of that immigration come from? The EU, of course. In the two years leading up to December 2014, EU immigration increased from 158,000 a year to 268,000 a year. Cameron’s promise is literally impossible to fulfil with the freedom of movement enshrined in EU law, and his ‘special status’ deal will do little to deter EU migrants, the vast majority of whom are not benefit recipients – less than 5% of EU migrants are claiming jobseekers allowance.
The British electorate’s opposition to migration extends to refugees, and ‘Leave’ campaigners have seized on reports that the UK may have to take more refugees in future, with polls showing that support for Brexit increases in response to images of the refugee crisis.
With Germany receiving 1.1m refugees in 2015 – a level of migration unthinkable to the British electorate – the current refugee crisis has very much been seen as a European problem from which the UK is relatively isolated. But there are fears that Britain could see similar numbers of refugees if the so-called Dublin regulation collapses. Under the Dublin regulation, refugees are obliged to seek asylum in the first country in which they arrive. The system, which had been under strain for years, was, in effect, finished off, after German Chancellor Angela Merkel said that all Syrian refugees would be eligible to seek shelter in Germany. With the rules due to be scrapped, perhaps in favour of a relocation quota system, voters are concerned that the UK could face a refugee crisis on a similar scale to Germany.
As an island nation, the UK has had the privilege of being able to reject refugees without risking appearing inhumane, however, dehumanisation has recently entered the political vernacular, with Cameron describing migrants attempting to reach Britain through Calais as a swarm. Interestingly, French authorities have recently moved to destroy the site near Calais where thousands of migrants live while attempting to enter Britain illegally, in a development which should go some way to reducing the number of tabloid front pages dedicated to the issue. Ultimately, if the union is to remain united, more must be done to show British voters that the EU has a viable solution to the migrant crisis that doesn’t involve mass immigration to the UK.
The End of the European Dream
The eurozone crisis and the migrant crisis are leading Britons to seriously consider whether the EU is a club they want to be a part of. People find it hard to say what the EU does for them. Tabloids publish headlines touting how much Britain puts into the EU compared with how much it receives and sensationalise regulations in such a way that the purpose of EU institutions is deemed trivial at best, meddling and wasteful at worst. ‘The EU is to ban selling eggs by the dozen’ is just one such example.
The strongest arguments in favour of the EU are the most subtle. Through its gradual enlargement, the EU has enhanced democracy and fundamental freedoms, increased cooperation and created a huge single market across the continent. The referendum isn’t just a vote for Britain’s exit. It is a vote for the future of the union itself. For accession states, seeing Britain leave the union will be like turning up to a nightclub and seeing people exit as you queue to get in. Never a good sign. Voters in accession countries will see Britain leaving the party and wonder whether it’s any good. Assuming Brexit becomes a reality, the likes of Serbia, Kosovo and Turkey may end up drifting from their democratic roadmaps.
JP Morgan economists estimate that credit markets are pricing in a 52% chance of Brexit. I suspect the odds of a UK exit are somewhat lower than that. I think voters will not want to venture into the wilderness that Brexit offers. The EU is far from perfect, but without Britain, Europe would be weakened in its ability to tackle the world’s biggest issues: climate change, interstate conflict and terrorism, to name a few. ‘Remain’ campaigners would do well to emphasise these arguments in the run-up to the referendum.