Bursting the Bubble

Britain and ‘the Continent’

16 June 2016 | by

With the referendum on the UK’s membership to the EU just around the corner and polls indicating a neck and neck race, campaigners on both sides are understandably desperate to score points. Winston Churchill has been resurrected in both Europhile and Eurosceptic forms. “If Britain must choose between Europe and the open sea, she must always choose the open sea”. This quote sings to the tune of the Leave campaigners’ favourite economic
argument which proclaims a Britain out of the EU will be able to tie itself with the vibrant economies of the Commonwealth and the rest of the world and rid itself from the dictates of a sclerotic EU. Churchill made this statement in a heated exchange with Charles de Gaulle during the Normandy landings in 1944, long before the Schumann declaration. The Remain campaigners like to remind us of Churchill’s vision of a “United States of Europe”. How involved Churchill would have liked Britain to be in a federal union remains heavily debated. In 1961, Churchill wrote, “I think the Government are right to apply to join the European Economic Community”. The application was subsequently vetoed by De Gaulle in 1963 as he saw Britain as too different in its geography, history, economy and trade relations to genuinely integrate with ‘the Continentals’.  The Leave campaigners argue that Churchill would never have agreed to Britain in the EU in its current form and this is where the Churchill debate become purely speculative. To understand Brexit, it is best to look at how it became a possibility in the first place.

It was the Conservatives who applied and negotiated for Britain joining the European Community and Labour – currently carrying the beacon of the In campaign – who resisted. Labour, whose name bears witness to its traditional focus on workers, looked upon the European Community as an economic union which might threaten the protections in place for unions and workers. It held a sceptical view that the Conservatives’ push for joining was part of a neoliberal agenda. It is clear that during this time, Britain viewed European integration as an economic rather than a political union, where market liberalisation might be favoured over social protections. Further integration and closer political union drove Labour and the Conservatives to trade places on their position towards the EU. To complicate the story further, according to YouGov, UKIP – Britain’s most Eurosceptic party – has gained support primarily by tapping into Labour’s base and especially from less educated and lower income Labour voters. However, there isn’t any clear evidence to determine a definitive correlation between income and education levels and attitudes held towards Britain’s membership to the EU. It seems Brexit can appeal to all.

Mind the gap

Brits are notorious for their Euroscepticism and have recently been the primary political force in obstructing further integration. Eurobarometer, the European Commission’s study into public opinion, consistently finds the Brits to be the most eurosceptic people in the EU. Britain has been on the loosing side of votes in the European Council the most. Those looking from the other side of the Channel with frustration at Britain’s hostility towards the EU may be tempted explain it as stemming from a deluded nostalgia for the empire or simply a mentality befitting of islanders. YouGov has found that Brits in the Leave camp are most likely to consider immigration as the primary political issue whereas those who want Britain to remain prioritise the economy and trade. A recent Guardian poll shows 54% of Brits believe that the negative effects of immigration outweigh the benefits the EU brings, with only 21% believing contrary. Brexit supporters view the the economic union of 70s having turned into a leviathan. They estimate that 48% of UK laws originate from the EU institutions when in reality it is approximately 13%. Resistance to the EU is grounded in political and sentimental motives. Many Brits cannot bear the idea of being subjected to rules made in and imposed by ‘the Continent’, even if the UK had a say in the making of those rules.

taking a cue from public opinion, the British government has promoted the UK’s increasing isolation from the EU and especially in the last decade. Since the financial crisis of 2008, as with all crises faced by the EU, the options were further integration or devolution of powers to the member states. A series of measures for common economic policies were agreed including the European Stability Mechanism, the Fiscal Compact Treaty and many other mechanisms to create a de facto European Banking Union. Britain hasn’t participated in any of these measures and for a large part this can be attributed to its exclusion from the Eurozone. However, Britain is now the least participatory member of the EU with opts outs to the Schengen Area, the Charter of Fundamental Rights and the Euro Plus Pact, among many others. Moreover, recently we have seen David Cameron clinch a deal whereby Britain will be excluded from any further European integration.

Increasing alienation from a closer union has coincided with the erosion of the Britain’s economic ties to the EU. According to EuroStat, in 2006, 63% of the UK’s trade was with other EU member states. Today that number is 44%, which is substantially lower than the 63% average of the other member states. The UK’s trade with the EU as a percentage of GDP is half of that of the other member states’, at 21% compared to an average of 42%. By these parameters Britain is the least integrated member of the EU for trade. Britain is distinguishable from other large EU member states for its economic liberalism. According to the OECD, Britain has Europe’s least regulated labour market, the World Bank’s lists the UK as an exceptionally easy place to do business in Europe and the UK’s financial sector is by far Europe’s largest. The UK also stands out from Europe in its cultural attitudes. The World Value Survey which investigates the public’s views of social, economic and political values finds the UK standing firmly in the ‘Anglosphere’ with the United States, Australia and Canada. It clearly stands apart from the Protestant and Catholic European groups.

One cannot ignore the role of WWII in British attitudes towards Europe. Contrary to other European countries, the Brits view WWII as their ‘finest hour’. Whilst other countries are either ashamed of their actions during the war or were humiliated by being occupied, the Brits struggle to let go of the time they consider themselves to have held the moral high-ground with the United States and saved Europe from fascism. Many Brits reject a future in a more integrated Europe as they still view “Europe as the source of all of Britain’s ills”, to quote the late Margaret Thatcher. They believe Britain was dragged into the European crises of the past and cannot see their participation as necessary in the Continent’s answer for peace and prosperity, the European Union. In fact the Guardian has found that 35% of Brits think that membership to the EU increases the likelihood of Britain going to war with only 19% believing the contrary. More recent crises have certainly not helped to promote closer ties with the EU. The Greek debt and migrant crises have inflated a sense of relief at Britain’s exclusion from the Eurozone and Schengen Agreement.

Beyond the 23rd of June

Only 15% of Brits identify themselves as European and this has manifested into a very unhappy marriage between Britain and the Continent. Professor Simon Hix of the London School of Economics has presented three scenarios for the future of Britain’s relationship with Europe. In the first, Britain votes to stay in the EU but remains its most politically reluctant and Eurosceptic member and its greatest obstruction for further integration. In the second, Britain leaves the EU but will certainly renegotiate trade agreements possibly in the Norwegian, Swiss or Canadian form. Even if Britain has a relatively small proportion of its economy dependent on trade with the EU, compared to the other member states, 21% of the world’s 5th largest economy is a substantial amount of money for both Britain and its EU trading partners. It is reasonable to expect Britain’s economic relations with the EU to be maintained as it is in the best interest of all parties. If things remain as they have been or if Britain votes to leave the EU it would seem that De Gaulle’s instincts for vetoing Britain’s application to join the EU in 1963 were spot on. The third scenario sees Britain not only staying in the EU but becoming a genuinely active member which participates like France or Germany. This is by far the most radical of the scenarios with the difference between the first two being relatively marginal. In third scenario, Britain would actively promote an ever-closer union that might possibly find itself looking something like Churchill’s ‘United States of Europe’. From this perspective, whether Britain chooses to leave or remain in EU is far less important than the hype suggests. Brexit’s real significance would be in that a member state leaving the EU is unprecedented.

What do you think?