In 2009, the European Union adopted its most important treaty in recent European history: the Lisbon Treaty. After eight waves of enlargements spread all through six decades, the European project had to evolve as it now represented more than 450 million people, dispersed throughout 28 member states. The Lisbon Treaty included a change in voting resolutions from unanimity to qualified majority and for the first time, Article 50 was ratified, proposing a provision for a member state to voluntarily leave the European Union.
In fact, the Lisbon Treaty offered flexibility yet it also fuelled growing scepticism as absolute agreement between states was no longer needed in voting resolutions. While Euroscepticism has always existed, the recent misfortunes surrounding the Eurozone and the growing sense of supranationalism of the institution have given weight to movements throughout Europe to doubt the benefits of the European project. David Cameron promised Britain a referendum on its status within the EU while he attempts to negotiate a change of membership but what would be the effects of a Brexit? Is a new type of membership really feasible?
Since its entry in 1973, Britain flourished economically as it gained access to the single market and its economy thrived as the world became intrinsically globalised. The European single market and the customs union advanced trade: barriers were removed so that goods, capital, people and services could move freely inside the Union. Additionally, instead of trading with 27 countries with different sets of rules, the common EU set of rules simplified and increased trading processes.In fact, the Department of Business estimated that 3.5 million jobs in the UK were directly or indirectly related to trade with other EU states and benefits from the single market were considerable. Employers profited from the single market: the free movement of people enabled them to recruit from a wider pool and confront some of the UK’s skill shortage. For instance, the construction sector has been facing difficulties finding suitably skilled British workers due to the absence of a comprehensive vocational education and training system. Census data estimates the number of non-UK born people working in construction at 10.6% in 2011 while the CITB’s latest employment forecast estimates the industry will need to find almost 224,000 new recruit between 2015-2019 – the EU provides a ready supply of foreign talent. The social sector is also suffering from low wages and poor conditions which have created a shortage: the Migration Observatory at the University of Oxford estimates that two third of care assistants in London are migrants.
So why would the UK decide to leave the EU and how would it do it?
According to the Bruges Group, a London think-tank against Britain involvement with the EU, a Brexit could save up to £3 billion a year as well as the £9 billion that is sent to Brussels, before coming back. Westminster would be able to create 1 million jobs according to the think tank.
Additionally, regulations could be simplified: the EU releases up to 1,000 rules each year – this could be reduced to 350 per year and targeted especially for Britain. The UK would regain control of common EU sectors such as Agriculture, Fishery, Justice and Home Affairs. The need for the 100,000 EU regulations could be reassessed, bureaucracy would be abridged and regulations would diminish from involving 100% of the British economy to the 9% that deals with EU exports. Britain would also regain control of its sovereignty: borders would be closed to free movement and the UK would be able to choose its immigration. The UK would rejoin international bodies, defending its own interests instead of EU representatives speaking for the Union.
A proposal advanced by UKIP envisaged breaking up with the EU completely and compensating the loss of the EU internal market by creating a parallel internal market composed of Commonwealth countries. The alternative of a Commonwealth Free Trade Area based on the model of the EU’s single market is unlikely to compete effectively with the loss of trade generated by a Brexit. According to the Centre for European Reform, 54% of Britain’s trade is with the EU and UK membership boosts its good trade of overall 30%. For instance, the UK trades more with Ireland than it does with any of the leading developing countries combined: Brazil, Russia, India, China – the British economy is more similar to other European economies than to emerging markets.
While Eurosceptics urge for a Brexit, most of them recognise there is no reversing globalisation and isolationism from the continent is not in Britain’s best interest: instead they want Westminster to reclaim Brussels’ powers while still remaining inside the internal market. The first alternative would be, “an amicable divorce” where Britain would seek European Economic Community (EEC) membership, which guarantees the free movement of people, goods, capital and services and therefore have access to the single market. The EEC membership requires European Free Trade Association (EFTA) participation – currently Norway, Iceland and Liechtenstein have adopted this model. While Eurosceptics have been luring electorate with the promise of EEC/EFTA membership, its advantages remain questionable. In fact, if Britain abandoned the European project it would still have to abide by its trade regulations. If it wishes to remain inside the single market, its exports will still have to be up to EU standards without the opportunity to have an input on decision-making. For instance, according to Business for New Europe, Norway still adopts 75% of EU laws. However, for Britain to change membership a treaty would have to be ratified by the 27 other member states and France and Germany are unlikely to permit this change of treaty, which they regard as opening Pandora’s box.
The second option, the “Swiss option” would be to negotiate bilateral agreements with the EU the same way Switzerland has done so. As the Council of the European Union has assessed the EU-Switzerland relationship as “having worked well in the past however has created a complex system with legal uncertainties and has become unwieldy to manage and has clearly reached its limits” – therefore it is unlikely the EU will duplicate the Swiss option with Britain.
In the long-term, Britain could potentially lose out as manufacturers relocate in more attractive countries inside the European Union. The City’s appeal as a financial capital would decrease as it would no longer be a gateway to the single market. Trade would be greatly affected as the EU is the UK’s main trading partner, worth more than £400 billion a year. Finally, outside the European Union, Britain would regain its sovereignty but would also have to renegotiate agreements without the clout of the largest economy in the world behind it.