The Europe speech (finally!)

I've been meaning to write something on David Cameron's "game changing" (or maybe not?) speech on Europe in which he promised a renegotiation of Britain's membership followed by a referendum to either ratify the new arrangement or leave the EU entirely.


Bottom line is that the biggest impact will be if Labour decides to match the renegotiate/referendum commitment or whether they stick to their current position of not offering one.

Because while David Cameron says he wants Britain to remain in the EU under more favourable terms, that scenario relies on a huge number of "ifs". By "huge number", I really mean 3:

1. the Conservatives win a majority (currently being offered at 13/8 on Ladbrokes)

2. the other EU leaders are willing to grant any sort of concession to the UK

and of course:

3. the public back whatever settlement is presented to them

I'd say the chances of a Conservative majority, especially after the boundary change was voted down, are fairly slim (though not impossible) and my prediction for 2015 is currently a toss up between narrow Labour majority or a hung Parliament with the Conservatives as the largest party. The referendum promise therefore requires the consent of whoever gives David Cameron the necessary majority in the Commons to remain as PM.

The second also seems very unlikely and this is something that I've talked about before. The "renegotiate then referendum" approach was tried before by Harold Wilson in 1975. He achieved a fairly meaningless renegotiation but it was enough to say that membership was now acceptable and campaign for a "yes" vote.

I expect David Cameron to achieve even less because at least in 1975 there was some good will towards the UK for the tortured process it had to endure when joining (namely the double deGaulle veto and high financial costs imposed that other members thought unfair). The rest of Europe currently sees the UK as carping from the sidelines and using a moment of existential peril for the Eurozone countries as an opportunity to take advantage for itself. A bit like war profiteering. It probably doesn't help that some Eurosceptics talk about the leverage for renegotiation in precisely these terms.

If David Cameron goes in and unilaterally demands better terms for Britain while remaining a full member of the single market, he will be met with frosty glares and awkward silence. His only hope is if Angela Merkel believes Britain is important enough as a liberal (and fiscally conservative) counterweight to protectionist (and fiscally profligate) countries like France that it is worth granting some minor concessions to keep the UK at the table.

This may be why David Cameron's speech tried to make the renegotiation issue less about Britain seeking unique terms of membership than about reforming the whole EU to make it work better for all members (i.e. work better for Britain, the others being a side benefit).

My prediction is that Angela Merkel and the other EU leaders will offer David Cameron some minor, fairly meaningless concession on an area unrelated to the single market but that even if this is not offered, Cameron will present the result of "renegotiation" as success and campaign in a referendum for it to be accepted.
He will be joined by Labour, the Lib Dems and most of the business community and the public will vote to remain an EU member under the "new" terms.

However, as mentioned, all this depends on either a Conservative majority in 2015 or whichever party props up a Conservative led coalition acceding to his European policy. The odds of which seem slim at the moment.

Therefore the interesting thing is whether Labour will offer a referendum or not. Tony Blair agreed to a referendum on the European Constitution to stop Michael Howard using it against him and the Conservatives, and Eurosceptic press, are already hitting Ed Miliband for his refusal to offer one on Britain's membership.

But despite the coverage it gets, Europe is still nowhere near the most important issue for the public and elections are decided on the state of the economy and the competence of the potential government. Labour are still blamed for the state the economy was in two years ago but with a potential triple-dip recession, the Conservatives advantage on this issue may disappear and Labour may end up in government despite taking a beating on Europe throughout the campaign.

However, if Labour does promise a referendum on the topic then, as I've also blogged about before, EU exit becomes more likely as the defeated Conservatives will likely lurch to the right and unite in favour of withdrawal. The in/out referendum then becomes (unpopular) Labour government against the media and a united right making withdrawal much more likely.

Eurosceptics therefore may find themselves facing a strange situation in which a Labour victory is more likely to lead to Britain leaving the EU than a Conservative one.