The EU Referendum

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The Referendum

You the British People will Decide - David Cameron announcing the EU Referendum

What is the EU Referendum?

A vote on whether or not Britain should remain in or leave the European Union . The referendum will ask the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”1)BBC: The UK’s EU referendum[[contid]]

As implied, voters will be prompted to choose between: a) remain a member of the European Union, or b) leave the European Union.

EU citizens and British Citizens, who have lived overseas for 15 years or longer will not be able to vote. Neither will those under 18 at the time the vote is held.2)Telegraph: Expat vote ban lifted, but not in time for EU referendum[[contid]]

What’s actually happening?

At the end of May 2015 David Cameron began to meet EU leaders including the leaders of the Netherlands, France, Germany and Poland in order to secure support for a series of reforms he sought to introduce to the European Union.3)Business Insider: UK’s Cameron meets EU leaders on referendum reform push[[contid]]

He now has a set of reforms agreed and is making the recommendation to the British public that the UK should remain a member of the EU. For details of these reforms, see our blue box section below.

During the referendum the purdah rules will apply which will limit the role of the Government during the election period. The Government will be unable to publish any material or make announcements which, in whole or in part, appear to be designed to affect public support for either side of the debate.4)House of Commons: ‘Purdah’ before elections and referendums[[contid]]

It’s generally thought that in the event the public decide to leave the EU, we will do so through Article 50 of the Lisbon treaty.5)Treaty on European Union: The Lisbon Treaty, Article 50[[contid]]

Article 50

When?

The referendum will be held on Thursday June 23rd 2016.

Why?

The Conservative’s 2015 manifesto promised that David Cameron would seek to reform the European Union before putting such changes to the British people in a straight in-out referendum on our membership of the European Union by the end of 2017.6)Conservative Party: Manifesto 2015[[contid]]

At the General Election, the Conservatives were the only one of the three established parties to guarantee a referendum if they won a majority.7)BBC: Manifesto Guide[[contid]]

What Now?

There may end up being several campaign groups rather than just one ‘official’ group for each side as there was in the Scottish Referendum for example. More information on the various campaign groups can be found in our viewpoints section.

Senior figures from all the parties are expected to announce, in the coming weeks and months, that they are joining or fronting their own party’s campaigns for the MPs and ‘grassroots’ supporters on either side of the debate.

2016 EU Membership Reform Negotiations

In February 2016, British Prime Minister, David Cameron, reached agreement with the EU’s 27 other member’s heads of states at the European Council that terms of the UK’s membership could be amended in order to deal with key concerns held by the Government, and as a condition of campaigning to remain in the EU.

The reforms he secured in the “New Settlement” are as follows:

  • Ever Closer Union:  The “United Kingdom, in the light of the specific situation it has under the Treaties, is not committed to further political integration into the European Union”. Next time the treaties are revised it will “make it clear that the references to ever closer union do not apply to the United Kingdom”.
  • Migrants & Welfare: The reforms will “limit the access of newly arriving EU workers to non-contributory in-work benefits for a total period of up to four years from the commencement of employment.” This will be phased from “from an initial complete exclusion but gradually increasing access to such benefits”. The so called emergency break “would have a limited duration and only apply to EU workers newly arriving in the UK over a period of 7 years.”
  • Child Benefits: Will be indexed “to the conditions of the Member State where the child resides.” At first this will “apply only to new claims made by EU workers in the host Member State. However, as from 1 January 2020, all Member States may extend indexation to existing claims to child benefits which are sent home by EU workers.”
  • Eurozone: Any measures which “deepen the economic and monetary union, will be voluntary for member states whose currency is not the euro. Legal acts . . . [between eurozone countries] shall respect the internal market.”
  • Regulation: A commitment to set “burden reduction targets in key sectors”.

Details of the full settlement can be found here.

References   [ + ]

Jobs & Trade

A significant proportion of the UK’s trade – its imports and exports – is done with EU countries. Similarly a large number of jobs in the UK are linked directly or indirectly to our trade with the EU. The majority of the UK’s trade and employment laws are derived from the EU itself, and the countries of the EU are a net contributor to the UK workforce.

Opponents of the UK’s membership argue that the EU harms business by reducing the amount of trade the UK can do with non-EU countries – as well as through market interventions and legislation. It’s also said that the EU over-supplies workers to the UK affecting job availability and putting pressure on wages.

Supporters of the UK’s membership say that the EU’s single market has helped UK trade, created jobs and that Britain’s best interests in Europe and globally – are served as a leading voice in the world’s largest trading bloc.

“UK trade shows import and export activity . . . is a main contributor to the overall economic growth of the UK.”

Office for National Statistics (ONS)1)ONS: UK Trade, November 2015[[contid]]

UK Trade with the EU

In 2014, the UK exported £515bn of goods and services, of which £227bn (44%) was to EU member states, notwithstanding the amount to which the EU acts as a gateway to the rest of the world (“The Rotterdam Effect“).

In the same year the UK imported £549bn of goods and services, of which £288bn (53%) was from EU countries.2)ONS: How important is the European Union to UK trade and investment?[[contid]]

The UK’s trade with both EU and non-EU countries is growing, however the UK’s exports to non-EU countries is growing more rapidly, and back in 2008 exports to non-EU countries overtook exports to EU countries.

UK Trade

Correspondingly, over the 15 year period 1999-2014, exports to the EU as a proportion of all UK exports has declined from a high of 55% in 1999 to a low of 45% in 2014. The EU also accounts for a smaller share of UK imports – falling to 53% in 2014 from a high of 58% in 2003 .

Certainly, the UK consistently ‘buys’ (imports) more than it ‘sells’ (exports) to the EU, and the UK/EU trade deficit has widened to £61bn in 2014.

UK Trade

Meanwhile the UK runs a trade surplus – selling more than it buys – with non-EU countries.

UK Trade

It’s also worth noting that “services” (such as financial, accountancy, consultancy, legal services) now account for more than two fifths of all UK exports.  The last decade has seen exports of services become increasingly important as a proportion of all UK exports – edging up from 37% in 2004 to 43% in 2014.

Where trade in services is concerned, the EU accounts for just over one third (37% / £79bn) of the UK’s services exports, with nearly two thirds (63% / £136bn) going to non-EU countries, in 2014.

The UK’s balance of trade in services with EU countries runs at a surplus (the UK sells more than it buys) – we export £79bn, and import £63bn.3)ONS: Balance of Payments[[contid]]

Whilst the EU is the largest “single market” for UK goods and services, on an individual country basis the United States is the UK’s single largest export market, followed by Germany and the Netherlands.

7 of the UK’s top 10 export markets are EU countries, whereas 13 of the UK’s top 20 export markets are non-EU countries.
UK Trade

EU Trade with the UK

To get the full picture of the UK’s trade with the EU, it’s important to look at it from the EU’s perspective.  With a GDP in 2014 of €14tn, the economy of the EU (including the UK) is now larger than any one individual economy, exceeding that of the US.

The EU also accounts for “around 20% of global exports and imports”, with two thirds of EU countries’ trade being conducted with other EU countries.4)European Union: The Economy[[contid]]

How much of the EU’s trade is with the UK?

  • In 2014, the EU28 exported €2,468bn worth of goods and services. The UK was responsible for exporting €370bn (the 2nd highest EU exporter), so EU27 exports accounted for €2,098bn (£1,636bn).
  • Add the UK’s imports from the EU back into the EU export total and the EU’s total exports are €2,445bn
  • The UK’s imports from the EU27 in 2014 were £288bn, so the UK accounted for 14.6% of EU27 exports.
  • In 2014, the EU28 imported €2,268bn worth of goods and services.  The UK was responsible for importing €326bn, so EU27 imports accounted for €1,942bn (£1,535bn).
  • Add the UK’s exports to the EU back into the EU import total and the EU’s total imports are €2,222bn.
  • The UK’s exports to the EU27 were £227bn, so the UK accounted for 12.6% of EU27 imports.

(Data sources: European Commission5)European Commission: European Union Trade in the World 2015[[contid]], ONS Pink Book Ch.96)ONS: Pink Book 2015[[contid]], 2014 average €/£ exchange rate €1 = £0.81)

UK & EU Trade

Based on trade values in 2014 – if the UK were outside of the EU – the UK would be the EU27’s second largest trading partner behind the United States.

Impact of EU membership on UK EU trade

A key objective of the EU is to encourage and promote trade between the member states. It does this by:

  • Eliminating tariffs on goods
  • Giving businesses and citizens the right to move goods, services, labour and investment freely between member states
  • Creating a single “rule book” for businesses selling to EU countries. 7)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 3[[contid]]

By helping to make trade easier between EU countries, the EU’s single market policies also have discouraging effects on trade with non-EU countries – such as setting tariffs on imports and regulating in a way that makes trade with non-EU countries “more difficult”. 8)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 3[[contid]]

The Pro-EU think tank – the CER (Centre for European Reform) – created a model to measure the effect of EU membership on UK/EU trade, and determined that “the UK’s membership boosts its goods trade (exports) overall by around 30%”, however they acknowledged that this effect wasn’t applicable to trade in services (42% of UK exports), and that its effect was more significant on some goods such as agricultural products. 9)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 4[[contid]]

If the EU removed its tariffs on imports, any EU country could choose to import less from within the EU and more from non-EU countries (if it was more cost effective to do so). An example of this could be that the UK might buy more lamb from New Zealand and less from Ireland, or more wine from Australia and less from France.10)Institute for Economic Affairs: The EU Jobs Myth[[contid]]

This is of course a hypothetical situation so the impact of EU membership on levels of UK trade with the EU and the rest of the world is difficult to determine, with the some analysis concluding that “the EU distorts trade so that the, overall, the economy is less productive and imports more expensive”11)Institute for Economic Affairs: The EU Jobs Myth, page 20[[contid]], and others finding that “there is no evidence the EU diverts trade overall”.12)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 5[[contid]]

What is generally agreed is that Britain’s interests are best served by reducing the costs of trade with its largest trading partners, however of the UK’s current Top 20 export partners only 7 trade as part of the single market with the UK, and the order could be shaken up somewhat if free trade was also established with the other 13.

Inward Investment

The UK is the second largest recipient of ‘foreign direct investment’ (FDI) in the world, and “the most attractive location in Europe for global investors” according to a study by Ernst & Young (EY).  In 2014 the UK was the leading European destination for investors from the US, France, Japan and India; and it was the leading European destination for investment in software, business services, automotive assembly and financial intermediation.13)EY: UK Attractiveness Survey 2015[[contid]]

The UK’s success in attracting investment is attributed to a number of factors including having an open, large and growing economy, a flexible labour market, excellent access to finance and capital, comparatively low corporate tax rates, use of the English language – and having access to the EU single market .

EU countries themselves are a major source of inward investment into the UK combining to account for £495 billion of FDI in 2014 (48% of accumulated investment into the UK (FDI “stock”), however the UK’s single largest investor is the USA with £253 billion (24%). The UK is also the second largest European investor in other EU countries.

Inward Investment

Impact of EU membership on FDI

“72% of investors surveyed regard access to the European single market as “very” or “fairly” important to the UK’s attractiveness as an investment destination” (EY).

Part of the attraction of the UK for foreign companies is as an export platform to the rest of the EU, so it stands to reason that investment into the UK could fall if access to the single market was restricted or became more costly in some way.

Assessing how important a factor EU membership is on UK FDI, the CER commented that “Market size is a major determinant of the size of FDI flows, and membership of the EU expands the UK market”, but also concluded that “the size of this effect is hard to determine.”14)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 5[[contid]]

House of Commons research came to the same conclusion: “establishing the existence and estimating the magnitude of the ‘EU effect’ on UK inward FDI, and hence the consequences of withdrawal, is very difficult.” 15)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

Nonetheless, it does certainly seem important that in order to safeguard and grow the UK’s attractiveness for inward investment, the UK would need to maintain its current levels of access to the EU single market – a condition that could be satisfied either by remaining in the EU, or leaving the EU but having an agreement on free trade (FTA).

In a survey by EY, when asked if the UK did leave the EU but kept single market access – 31% said it would still be “less attractive”, although 22% said it would actually become “more attractive” and 43% said “no change”.16)EY: UK Attractiveness Survey 2015[[contid]]

Inward Investment

This case for the UK potentially becoming more attractive outside the EU is largely based on the opportunity “to establish a regulatory regime more favourable to overseas investors . . . [and] regain competence to negotiate international agreements on foreign direct investment with third countries”.17)House of Commons: Exiting the EU: impact in key UK policy areas, page 29[[contid]]

And the case for the UK becoming less attractive (even if it retains the same level of access to the single market) is largely based on its diminished ability to exert influence over regulatory matters when it comes to trading with the EU: “The UK would still have to comply with the acquis communautaire in exchange for market access, but it would be powerless to influence the acquis.”18)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 8[[contid]]

In summary, it is reasonable to conclude that access to the single market is one of a number of important determinants for FDI; but the fact that the UK is more successful at attracting inward investment than other EU members – and attracts almost half its inward investment from EU countries – is an indicator that the UK has a lot more to offer besides its access to the EU single market. It’s also fair to say that FDI is performing well under the UK’s current arrangement – and change introduces uncertainty.

UK Jobs and the EU

UK Jobs

Much of the economic argument over Britain’s membership of the EU revolves around the impact our membership has on jobs in the United Kingdom.  Research suggests that between 3 and 4.3 million jobs in the UK are either directly or indirectly linked to trade with other EU countries.

Politicians across the political spectrum have quoted these figures to emphasise how important the EU is to UK employment, the implication being that there would be huge job losses if the UK were to leave.

However, as a House of Commons report states, these estimates represent the number of jobs related to trade with other EU member states… “this is not the same as saying that over 3 million jobs are dependent on the UK’s EU membership”. 19)House of Commons: UK-EU Economic Relations Briefing Paper 06091[[contid]]

An important distinction has to be made between membership of the EU and trade with the people and businesses of EU countries, not least because buying and selling decisions tend to be based on cost and quality – rather than politics.

If trade with EU countries did fall significantly (for reasons related or unrelated to Britain’s EU membership status), then it is valid to suggest that 3-4.3 million jobs could be affected in some way.

The level to which this number of jobs would be affected would depend on:

  • The volume and value of any UK/EU trade reductions.
  • Whether any fall is off-set by an increase in trade with non-EU countries.
  • Which industry sectors are most affected and the impact of any trade tariffs.
  • The potential for a fall in imports from the EU to drive more domestic demand and create jobs.
  • The dynamism of the UK labour market as it adapts to reduced demand in some areas and more in others.

Impact of EU membership on Jobs

The EU aims to encourage intra-EU trade by eliminating tariffs on goods, allowing free movement of goods, capital and labour, and by creating a single rule book for trading with its 28 nations. To that extent it can be said to create jobs. However its policies towards non-EU trade could also be said to bring about the opposite.

Employment Laws

The EU’s influence on jobs extends beyond trade. The majority of employment legislation in the UK comes from the EU, and this affects all employment in the UK – not just employment associated to EU trade. Some of the more controversial EU-derived employment laws are the Working Time Regulations 1998 and Agency Worker Regulations 2010. According to the CBI, 49% of its members say that pan-EU employment rights in areas such as working hours are a negative for business.20)CBI: Benefits of EU Membership outweigh the costs[[contid]]

Calculating the impact of EU-derived employment law on jobs in the UK is analysed in the Money section, but suffice to say that business sees much of the regulation as a burden, and if the UK did leave “. . . the government would face pressure from employers’ associations to repeal or amend some of the more controversial EU-derived employment laws”, albeit with opposition from trade unions.21)House of Commons: Exiting the EU Briefing Paper 07213[[contid]]

Labour Supply

Another major area where Britain’s membership of the EU impacts jobs is in UK labour supply. The EU’s free movement gives citizens of EU countries the right to live and work in any EU member state. Many workers from across the EU have exercised that right and moved to the UK for work. As we discuss in our Immigration section, more than ⅔ of migration into the UK from the EU is for work-related reasons22)ONS: Labour Market Statistics[[contid]], and for year ending June 2015 162,000 workers came to the UK 23)ONS: International Migration reasons for immigration[[contid]]).

The accumulated labour pool of EU citizens working in the UK exceeded 2 million in 2015 according to the ONS’s Labour Market Statistics, which accounts for 6.5% of the UK’s working population.24)ONS: Labour Market Statistics[[contid]] According to the Annual Population Survey (2013) 47% (750,000) of EU-born workers were in high-skill employment and 53% (870,000) were in low-skilled employment, two thirds of which were from EU8 & EU2 countries.25)Nomis: Annual Population Survey[[contid]]

UK Jobs

The impact of the EU’s labour supply on the UK’s labour market is a hotly debated area, with the main focus being on low-skilled employment. Eurosceptics claim that EU migrants “can often deprive British citizens of jobs in the low-skilled end of the labour market”26)Leave.eu: On migration[[contid]]; and push wages down.27)Telegraph: Nigel Farage: ‘Massive oversupply’ of foreign labour is forcing British wages down[[contid]]

Whilst hardened Eurosceptics have been most vocal about the adverse effect (of migration in general) on jobs and wages, more moderate voices have also spoken on the subject, including Ed Miliband who said that some UK nationals “lose out” as a result of new arrivals28)Huffington Post: Ed Miliband Says Migrants Will Make Life Harder For British Workers[[contid]], and Theresa May saying “we know that for people in low-paid jobs, wages are forced down even further while some people are forced out of work altogether.” 29)Guardian: Theresa May to tell Tory conference that mass migration threatens UK cohesion[[contid]]

Despite this, studies have been less conclusive – both on job availability and wages. In 2015, the LSE’s CEP reiterated its stance that “there is still no evidence of an overall negative impact of immigration on jobs, wages, . . . any negative impacts on wages of less skilled groups are small30)LSE CEP: Immigration and the UK Labour Market[[contid]].

The Government’s own Migration Advisory Committee (MAC) found a “tentative” association between native workers’ employment and working-age migrants who were from non-EU countries, when “the economy is below full capacity”.31)Migration Advisory Committee: Analysis of the
Impacts of Migration[[contid]]

A recent Bank of England study did did find that a “10% rise in the proportion of immigrants is associated with a 2% reduction in pay in the semi/unskilled services sector” and noted that EU and non-EU workers have more or less identical impacts on occupational wages.32)Bank of England: The impact of immigration on occupational wages[[contid]]

Explaining why additional labour supply doesn’t necessarily harm jobs and wages as much as some might expect, economists say that immigrants can increase demand for labour by starting businesses and creating jobs, and that in fact new migrants to the UK may pose more of a threat to existing migrants in work than to British workers33)The Migration Observatory: The Labour Market effects of Immigration[[contid]].

Working Abroad

The third area where the the EU affects employment in the UK is that through free movement it makes it much easier for British job-seekers to work abroad in another EU member state. (See Living and Working in the EU)

If we Leave

With regards to Trade, if the UK votes to leave the EU, most economic analyses conclude that it would be desirable – if not important – for the UK to maintain current levels of access to the single market . This would go a significant way in protecting current levels of trade with EU countries and the UK jobs associated with that trade.

Eurosceptics present the case that the UK would be in a strong negotiating position with the EU when it comes to negotiating a free trade agreement (FTA), for the main reason that the UK “buys more than it sells”, and – were the UK to leave – on current trade levels it would become one of the EU’s largest export markets.

The Pro-EU argument counters that “The UK cannot assume that it could dictate terms because it runs a trade deficit with the EU”, reasoning that the EU represents a larger market for the UK than the UK does for the EU. They add that half of the UK/EU trading deficit “is accounted for by just two member states: Germany and the Netherlands” – thus most EU nations have less incentive to agree a free trade deal.34)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment – page 7[[contid]]

The eurosceptic argument adds that leaving the EU would “provide the UK with the freedom to negotiate its own free trade deals” and increase trade with the rest of the world – particularly important when the EU’s share of world GDP is declining.35)Leave.eu: On global trade[[contid]]  And as the 5th largest economy (IMF, Worldbank36)Wikipedia: List of countries by GDP (nominal[[contid]]) the UK would be in a good position to do just that.

The pro-EU counter-argument to this is that the UK on its own would have “to renegotiate trade agreements with non-European countries from scratch . . . [which] would be far from straightforward . . . and for many countries negotiating a free trade deal with a relatively small economy like the UK would not be a big priority.”37)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment, page 11[[contid]]

We discuss various alternatives here, but where jobs and trade is concerned the impact on GDP ranges from a “best case” scenario of signing an FTA with the EU to a “worst case” of WTO trade tariffs being erected. The think-tank Open Europe estimated that a “realistic range is between a 0.8% permanent loss to GDP in 2030 and a 0.6% permanent gain in GDP in 2030, in scenarios where Britain mixes policy approaches.”38)Open Europe: What if…? The consequences, challenges and opportunities facing Britain outside the EU[[contid]]

Whilst there are no certainties, there is enough evidence to suggest that it would be in both the UK and the EU’s mutual interests to negotiate a free trade deal. What is certain is that even in a worst case scenario the EU couldn’t impose excessively punitive tariffs on UK trade and would need to accord with WTO “most favoured nation” (MFN) rules; and the EU is legally required by its own treaty to “negotiate and conclude an agreement with that [withdrawing] State . . . taking account of the framework for its future relationship with the Union.”39)European Union: Treaty of Lisbon A49-3[[contid]]

With regards to Jobs – if the UK were to leave the EU – it’s difficult to predict the extent to which the 3 to 4.3 million jobs associated to EU trade would be affected.  If trade with the EU were to decrease and not be replaced with an increase in trade to non-EU countries, then it’s reasonable to expect some of these jobs may be lost; however it is “almost impossible to say how many jobs are ultimately dependent on our continued EU membership without knowing what policies the UK would adopt outside the EU.”40)IEA: The EU Jobs Myth[[contid]]

In terms of labour supply and wages, the ‘price’ for continued access to the EU free market for the UK is likely to be fairly liberal continuation of free movement of labour, at least in the short-term.41)NIESR: Free movement:here to stay?[[contid]]  Whilst this may be politically awkward, it could be presented in a more positive light – the UK having reclaimed powers to amend the status-quo should it be in the country’s interests to do so at some point in the future.

Continuation of the EU’s employment and business regulations is likely to be the other major concession in exchange for maintaining access the EU single market , again the fact that the UK could make changes (should it deem it beneficial to do so) may defuse any political ramifications.

If we Remain

A vote to remain maintains the status quo and commits the UK to both current and future developments of the EU and its policies on trade and employment.

Supporters of EU membership say that the UK would continue to benefit from being “part of the world’s largest trade bloc”, one which “Washington, Beijing and Tokyo have to take seriously.42)Independent: The In/Out Question: Why Britain should stay in the EU[[contid]]  They add that as a member of the EU, the UK is able to influence the rules and regulations governing the EU single market.43)Centre for Economic Reform: The impact of leaving the EU on the UK’s trade and investment- page 12[[contid]]

The case for remaining in the EU also highlights forthcoming opportunities that the UK would miss out on if it left – such as the free trade agreements (FTAs) currently being negotiated with the United States (TTIP), Canada (CETA)44)British Influence: Prosperity[[contid]] and Japan (EPA), which have the potential to “lower consumer prices and increase trade”.45)LSE CEP: Should We Stay or Should We Go? The economic consequences of leaving the EU[[contid]]  EU supporters point to these, the lowering of import trade tariffs, and developments in creating a single market for services46)European Commission: Single Market for Services[[contid]] as evidence of progress and a bright future in the EU.

These trade deals are questioned by leave supporters who claim that the ‘uncompetitive’ EU is slow at negotiating such deals on our behalf.47)Leave.eu: On Global Trade[[contid]]  Trade Unions also oppose the new deals as they unfairly seek to liberalise the trade in services, including public services, protect the rights of foreign investors and reduce ‘regulatory barriers’ to trade, forcing through a deregulatory agenda.48)Unison: TTIP, CETA and TISA – what you need to know about EU trade agreements[[contid]]

Eurosceptics warn that the EU’s commitment to closer integration, not least to safeguard the future of the euro currency – will leave the UK with “even less influence than it currently has”.49)Leave.eu: On Global Influence[[contid]]

Summary

  • UK trade with EU countries is large, but the UK’s trade with non-EU countries is larger and the gap is currently growing.
  • 7 of the top 10 UK trading nations (exports) are in the EU, but 13 of top 20 are non-EU and the UK’s largest trading partner is the USA.
  • The UK currently accounts for 17.6% of the EU’s exports and 14.8% of its imports, so is an important trading partner for EU countries, if not as important as the EU is to the UK.
  • The EU seeks to promote trade between EU partners, with the side-effect of discouraging trade with non-EU countries via its system of import tariffs and its regulatory framework.
  • Despite this, there is still significant trade conducted beteen EU nations and non-EU nations, albeit some products are traded less than others, such as agricultural products.
  • The UK is a major beneficiary of inward investment (FDI), and the UK’s EU membership is one of a number of factors which determine its attractiveness to foreign investors.
  • Jobs associated to trade with EU members could fall if UK/EU trade falls and isn’t supplemented by trade or economic gains from elsewhere.
  • Studies find that the EU’s supply of labour to the UK appear to have a minimal overall effect on the availability of jobs and wages to UK workers.
  • EU-derived employment law is seen as a burden for UK businesses but securing the right to change it and actually changing it are two separate things.
  • The main case for leaving the EU is to give the UK the rights to negotiate its own trade deals elsewhere and have greater control over the UK jobs market.
  • The main case for remaining in is that the UK stays close to its largest market, exerting influence from within, maintaining current employment levels, and benefiting from existing and new EU trade agreements.

References   [ + ]

Money

The UK’s EU membership carries with it certain costs both in terms of direct contributions to the EU’s budget, and also indirect monetary costs such as complying with regulatory requirements and other EU policies.

Opponents of EU membership argue that leaving the EU could make the average UK household better off, free businesses from excessive regulations, and save the treasury billions of pounds a year – savings which could be better spent elsewhere.1)Leave.eu “The facts on Money”[[contid]]

Whereas supporters of EU membership argue that our EU contribution should be seen in context – being small relative to other areas of the budget, and vastly outweighed by the economic benefits gained in terms of jobs and trade.  Also see our Jobs & Trade section.

The UK’s contribution to the EU

Britain’s gross contributions to the EU are the equivalent of £48.8million a day (2015 forecast figures), or about £17.8 billion a year2)House of Commons Library: EU budget 2014-20[[contid]] – and this is made up of payments to the central EU budget as well as customs duties and agricultural levies.3)Full Fact: Is our EU membership fee £55 million?[[contid]]

Importantly, the UK does get a proportion of this money back through rebates and schemes like the Common Agricultural Policy. In 2015 receipts from the EU amounted to £9.3 billion, meaning that the pure net ‘cost’ of the EU was £8.5 billion or £23 million per day.4)Telegraph: What has the European Union done for us?[[contid]]  This makes the UK a net contributor to the EU – we put in more than we get back.  This is consistent with the EU’s role of “promoting economic cohesion and solidarity” among member states (Article 2) – i.e. richer EU countries help poorer EU countries.

EU Budget

Whilst the known and predictable costs of EU membership are a key part of the debate, unpredicted and apparently unforeseen surcharges in 2014 fuelled scrutiny over just how much the EU costs.

In November 2014 a one-off £1.7bn (€2.1bn) surcharge to the UK’s annual contribution to the EU angered many, including the Prime Minister and the Chancellor who called the bill “unacceptable”.5)BBC: Cameron insists UK will not pay £1.7bn EU bill in full[[contid]]  The surcharge came about as a result of the British Government changing how it measures the performance of the UK economy, so an improvement in overall figures led to a higher contribution needing to be made.6)Sky News: UK’s Surcharge Row [[contid]]

For eurosceptics the surcharge demonstrated how vulnerable the UK is to the financial demands of the EU.  A prominent Conservative backbencher said the surcharge “offended all our principles of natural justice and fair taxation” which represented “a very large increase in tax on the British people charged retrospectively without their agreement”.7)BBC: UK told to pay £1.7bn extra to European Union budget[[contid]]

However, whilst acknowledging the miscalculation, The Office for Budget Responsibility (OBR) indicated the additional surcharge was a one-off and unlikely to be repeated:

“The forecast . . . did not anticipate the additional one-off contribution that the UK would be required to make this year . . . We do not anticipate a repeat of the large one-off adjustment seen this year . . . as we have no indication that the ONS plans to make further significant revisions to its estimates of GNI.”

Office for Budget Responsibility8)OBR: Economic and fiscal outlook 2014[[contid]]

Relative cost of the EU

A net contribution to the EU of £9.8 billion in 2014 (Est. £8.6 billion 2015) is around 1.3% of the UK’s total spending of £734 billion (2014).  This compares to spends of around £129 billion on the NHS, £89 billion on education, £44 billion spent on defence, £19 billion on transport9)UK Public Spending:  Highlights of HM Treasury Budget 2015[[contid]], and £11.9bn on foreign aid.10)OECD: Aid at a glance[[contid]]

EU Membership

Fishing & Agriculture

Fishing and agriculture are two industries that have been affected more than most, by the EU intervening in their respective markets via the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP).

The aim of the CFP is to give all European fishing fleets equal access to EU waters and fishing grounds, and to try and protect fish stocks through various market interventions.11)European Commission: The Common Fisheries Policy (CFP)[[contid]]  However the policy is accused of undermining the British fishing industry and is under attack for its failure to protect fish – with data from the European Commission showing that 75% of EU fish stocks are overfished, compared to 25% on average worldwide.12)European Commission: CFP Reform[[contid]]

In monetary terms, UKIP claim the EU’s CFP is responsible for “£2.5 billion taken out of the UK economy each year”.13)UKIP:  Fisheries Policy[[contid]]  Meanwhile supporters argue that the policy also provides state-of-the-art scientific advice and support to the fishermen along with €4.3bn (£3.2bn) from the European Fisheries Fund which backs reform and modernisation.14)Debating Europe: Arguments for and against the Common Fisheries Policy[[contid]]

Accounting for an even larger proportion of the EU budget is the Common Agricultural Policy (CAP) which involves EU member states agreeing to intervene to buy farm output when the market price fell below an agreed target level.  This helped reduce Europe’s reliance on imported food but also led to over-production, and the creation of “mountains” and “lakes” of surplus food and drink.15)BBC: Q&A: Reform of EU fishing policy[[contid]]  The CAP is controversial because it accounts for a around 40% of the EU budget benefiting an industry which only contributes around 2.3% of the EU’s GDP .16)EU Bookshop:  2014 EU budget at a glance[[contid]]  It also creates artificially high food prices by levying high import tariffs on non-EU produce.  Justification for the CAP comes in the form of ensuring food and animal welfare standards, protecting the environment, safeguarding food supply, and ensuring price stability.

Agricultural Policy

Red Tape

Red Tape ” is said to have cost the UK economy an average of £14.6bn per year between 1998 and 2010 according to Open Europe17)Open Europe: Measuring eleven years of EU
regulation[[contid]]
, of which £10.3bn per year (71%) of the regulations came from the EU.18)Full Fact / Business For Britain: EU Business Regulation[[contid]]  In March 2015, Open Europe went on to calculate “that the cost of the 100 most burdensome EU-derived regulations to the UK economy [now] stands at £33.3bn a year in 2014 prices.”19)Open Europe: Top 100 EU rules cost Britain £33.3bn[[contid]]

The British Government has recognised EU red tape as an area for renegotiation, with David Cameron setting out to secure an agreement which “. . .respects the rule of the single market but is protected by fair safeguards, and free of the spurious regulation which damages Europe’s competitiveness”20)Telegraph: David Cameron’s EU speech in full[[contid]].  However others point to the fact that some industry sectors are affected more by regulations than others, and there’s insufficient research to actually distinguish what’s a necessary, vital intervention and what’s a burdensome and “spurious” piece of red tape.21)Full Fact: A burden on British business? The extent of EU regulation[[contid]]

The process of ‘cutting red tape’ is far from easy, as although expensive to some businesses, it can also be a benefit to workers and consumers.  For example, health and safety laws are costly for businesses but also lead to less injuries and occupational hazards.22)The Guardian: EU regulation: red lines for red tape[[contid]]

Red Tape

2016 EU Membership Reform Negotiations

In his reform negotiations this year, David Cameron secured agreement from the other heads of states at the European Council to reduce the burden of red tape.  The agreement commits the EU to:

…lowering administrative burdens and compliance costs on economic operators, especially small and medium enterprises, and repealing unnecessary legislation . . . while continuing to ensure high standards of consumer, employee, health and environmental protection.

European Council, 18-19 February 201623)European Council: Conclusions – Competitiveness[[contid]]

Tax

While the EU aims to level the playing field, member states have retained control over the majority of direct taxes. The biggest influence the EU has is on VAT, where it has set minimum VAT thresholds through the European VAT Directives – presently a 15% standard rate.24)Avalara VATLive: 2016 European Union VAT rates[[contid]]

Eurosceptics present the case that by leaving the EU some taxes could be reduced as a result of the money saved from membership fees.  For example at the last election, UKIP pledged to cut inheritance tax paid for, in part, by a reduction in EU contributions.25)BBC Election 2015: Nigel Farage: UKIP would abolish inheritance tax[[contid]]

In an advisory note, the law firm Freshfields Bruckhaus Deringer analysed the impact of the UK leaving the EU on taxes and concluded that:

“. . . post-Brexit, the UK could amend tax law without EU constraints – but may not want to depart from generally business-friendly EU directives. The scope of change would depend on the model of any new, post-Brexit relationship between the UK and the EU.”26)Freshfield Bruckhaus Deringer: Potential tax implications of the UK leaving the EU[[contid]]

Tax

Tax Avoidance

Proponents of the EU see the issue of tax evasion as an important part of the European Union’s role in UK tax affairs.  Currently the cost of tax evasion (illegally hiding information about your finances to reduce your tax bill) and tax avoidance (legal use of tax loopholes) is reported to amount to £7.2bn.27)The Week: Tax avoidance[[contid]]  Some have also argued that only through a ‘joined-up’ EU strategy can this be tackled, and that if we leave the EU “. . . tax avoidance and evasion will reach crippling levels as our economy becomes increasingly wholly owned by foreign multinationals that make tax avoidance in Britain central to their business strategy.”28)The Guardian: Editorial “If Britain leaves Europe, we will become a renegade without economic power”[[contid]]

However it is also argued that tax avoidance/evasion is already too high in the UK and being a member of the European Union has thus far done little to stop this.  In 2015, the UK government itself actually rejected plans drawn up in Brussels for an EU effort to combat industrial-scale tax avoidance by multinationals via tax harmonisation.29)The Guardian: UK to reject EU plans to combat multinational tax avoidance[[contid]]

Companies like Google have also been able to reach separate tax settlements with EU countries rather than there being an obvious and consistent EU-wide arrangement.30)Independent: UK ‘laughing stock’ of Europe after Italy claims €227m in unpaid tax from Google[[contid]]

The Money in your pocket
Campaign groups on both sides argue that households would be better off if the UK stays or leaves the EU.

  • The average UK household would be £933 better off out of the EU, according to Leave.EU

They argue that £547 would be saved from the CAP and CFP alone. Other large savings would come from the membership fees and liberalisation of markets (cheaper clothes etc).31)Leave.eu: On Money[[contid]]

  • Europe is worth £3,000 per year to every household, say Britain Stronger in Europe32)Britain Stronger in Europe: A Stronger Economy[[contid]]

Their figure, originally produced by the CBI, is based on estimated benefits of EU membership on the UK’s GDP of between £62bn amd £78bn per year, divided by the number of households.33)CBI: The benefits of EU membership to British business have significantly outweighed the costs[[contid]]

While we haven’t yet found any independent analysis of the Leave.eu figure, there is analysis on the Stronger In / CBI figure.  The £3,000 figure has been criticised for deliberately selecting research papers that showed EU membership created a net gain in UK GDP, and excluding other research that showed a net cost.34)BBC: Daily Politics 3rd March 2016[[contid]]  This criticism has been defended as being “a reasonable ballpark estimate of the benefits of membership” and that “it should not be used . . . as a precise measure of what we gain from the EU. Nor should it be used to predict the cost of Brexit.”  Professor John Van Reenen, Director of the Centre for Economic Performance at LSE, is also cited as saying “5% isn’t an unreasonable estimate of the benefits of UK membership of the EU, particularly once the dynamic effects of competition and investment are taken into account.”35)INFacts: CBI’s £3,000 figure should not be taken as gospel[[contid]]

Analysis by the House of Commons Library looked at a range of studies, of which 4 found EU membership to be a net cost to GDP, 1 neutral, and 3 a net gain to GDP.  They concluded that:

“[EU] withdrawal would have significant impacts on certain [business] sectors and in certain areas [of the country]. How the UK Government of the day filled the gaps in economic policy left by withdrawal from the EU would have an important bearing on its consequences”.36)House of Commons Library: The economic impact of EU membership on the UK – Page 5[[contid]]

If we leave

If we left, the UK would have no formal or legal obligation to contribute to the EU budget, nor adopt any of the legislation or specific regulations imposed by the EU (pending any trade deals etc).  Any legislation which has already been incorporated into UK law would remain effective, although now it could be changed should it be deemed politically or economically beneficial to do so.

However, subject to the nature of the UK’s post-Brexit relationship with the EU, the UK may find itself having to pay individual EU countries in other ways.  For example, between 1994 and 2014 Norway spent €3.27bn as a part of its membership of the European Economic Area (EEA), although these payments are different to an EU ‘membership fee’.37)Norway Mission to the EU: The EEA and Norway Grants[[contid]]

Areas of the UK where living standards are below the EU average may be worse off by leaving the EU, as assistance and investment from the EU (It’s European Regional Development Fund and European Social Fund) would be withdrawn – and would need to be substituted by replacement initiatives from Westminster.38)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

The UK could reclaim control and the associated financial benefits for fisheries in the UK’s exclusive economic zone (EEZ) and exclude foreign vessels, however this would require the UK to manage fish stocks, impose and enforce rules, enforce exclusions and be subject to exclusion from other EEZs, and could lead to potential trade barriers with the EU.39)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

With regards to British agriculture, it’s expected that leaving the EU would bring about a reduction in farm incomes as the UK would be “unlikely to match the current levels of subsidy”, however benefits may exist in terms of striking trade deals outside of the EU and having more flexibility on pricing.40)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

The opportunity for cost reductions from the removal of EU red tape is uncertain, not least because businesses that export to the EU would need to continue to comply with EU product standards.  However the opportunity would exist to regulate “according to the UK’s own domestic priorities” and better adapt to changing circumstances.41)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

If we remain

In terms of the costs of the EU itself these are expected to rise over time.  This is due in part to the comparative strength of the UK economy versus other EU members.  The Office for Budget Responsibility said it expects Britain’s contributions to Brussels to jump by £1.3 billion next year alone.42)Telegraph: Budget 2015: Cost of EU member to be £3 billion higher than expected[[contid]]  These costs could rise further if we were to see more economic turbulence in Greece, Spain or Italy – as the UK would need to shoulder a larger proportion of the costs.

The European Parliament approved a package of major reforms in 2013 to the EU common fisheries policy (CFP), which were expected to come into law in 2015.  These reforms are designed to cut waste and stop overfishing in European waters.  The existing system of fishing quotas – which often leads to tonnes of perfectly good fish being dumped at sea – will also be reformed.43)BBC: Q&A: Reform of EU fishing policy[[contid]]

Reform of the common agricultural policy (CAP) has also been planned which the EU promises will bring a more efficient CAP that “introduces a new architecture of direct payments; better targeted, more equitable and greener, an enhanced safety net and strengthened rural development.”44)European Commission: Overview of CAP Reform 2014-2020[[contid]]

In an effort to monitor regulations and red tape the EU has embarked on a programme to screen “the entire stock of EU legislation on an ongoing and systematic basis to identify burdens, inconsistencies and ineffective measures and [identify] corrective actions”.45)European Union: Access to European Law[[contid]]

In areas of taxation, the EU is likely to pursue its agenda of harmonising taxes in order to level the playing field across EU member states, however this will probably be met with continued resistance from members, including the UK.

Summary

There has never been a comprehensive report on the overall costs versus and gains of our EU membership.  Obviously the only costs aren’t through our membership fees, just as the only benefits aren’t EU jobs, for example.  It’s worth keeping an eye on this Treasury Committee Inquiry that is seeking to answer some of these questions.

“Framing the aggregate impact in terms of a single number, or even irrefutably demonstrating that the net effects are positive or negative, is a formidably difficult exercise. This is because many of the costs and benefits are subjective or intangible. It is also because a host of assumptions must be made to reach an estimate.”

House of Commons Library46)UK Parliament: In brief: UK-EU economic relations[[contid]]

  • Certain costs will persist in the event of leaving the EU, most notably in areas where UK continues to trade with the EU.
  • Leaving removes the obligation to pay towards the EU (but ‘out’ countries like Norway still contribute), and gives the UK the opportunity to remove regulation and red tape should it be in its interests to do so.
  • Both opportunities and threats may exist for agriculture and fishing in the event of an EU exit.
  • Taxes are unlikely to be a major factor in the EU membership debate.

Economy

References   [ + ]

Immigration

As a member of the EU, Britain is signed up to the free movement of people between the UK and the other member states, which grants all EU citizens equal right to live and work in any EU country.

The numbers of EU citizens coming to live and work in the UK has increased significantly in recent times, with immigration rising from an average of 60,000 per year (1991-2003) to 268,000 in 2014.  As a proportion of all UK immigration, the EU’s share has also increased from around 16% (1991-2003) to 42% in 2014.1)Migration Observatory: Long-Term International Migration Flows
to and from the UK[[contid]]

The lack of controls available to the UK Government over EU migration is one of the most controversial aspects of the UK’s EU membership.2)House of Commons Library: EU referendum: impact of an EU exit in key UK policy areas[[contid]]  It limits the UK’s ability to control overall immigration figures, and all attempts to manage immigration have to be targeted at non-EU immigration.

High levels of immigration in general have been blamed for a wide range of social and economic challenges, but also credited with contributing to economic growth.

EU Immigration relative to all UK immigration

To understand how EU membership affects UK immigration, we need to distinguish between immigration from the EU and immigration from other countries of the world.  It’s also useful to look at net migration (the difference between those arriving and those leaving) as this is what contributes to an increase or decrease in the UK’s population.

In 2014, net immigration of EU citizens reached 174,000 (an increase of 51,000 on 2013 figures) accounting for 47% of the net gain.  In the same year net immigration of non-EU citizens was 197,000 (an increase of 51,000 on 2013 figures) accounting for 53% of the net gain.3)ONS: Migration Statistics Quarterly Report, November 2015[[contid]]  Latest provisional estimates for the year ending September 2015 put net EU immigration at 172,000 and non-EU immigration at 191,000 – demonstrating that net immigration from both sources is increasing.4)ONS: Migration Statistics Quarterly Report, February 2016[[contid]]

In terms of where people are migrating from, the majority of immigrants come from non-EU countries India and China (2010-14) followed by the EU countries of Romania, Poland and Spain.

Immigration

What is notable is that immigration from EU countries between 2012 and 2015 has increased from 65,000 to 180,000 per annum – a 276% increase over the period.

Immigration

Reasons for EU immigration

Increasing levels of immigration from the EU – most notably from 2012 to 2015 – is broadly attributed to two principle drivers: the strength of Britain’s economy relative to that of the rest of the EU5)Guardian: Immigration has never been higher – and that’s no reason to panic[[contid]], and the addition of the “EU8 ” and more recently the “EU2 ” countries.

Immigration

All regions of the EU are supplying an increasing number of migrants to the UK according to the statistics, but the sharpest increase since 2012 has been from the two “EU2 ” countries which (as of June 2015) now account for 21% of immigration from the EU.  For the year ending June 2015, immigration from EU2 countries has increased by 61% compared to 2% for the EU8 , and 16% for EU15 countries.

Immigration

As the statistics show, the UK is an attractive destination for EU workers – the British economy has scale (the 2nd largest economy in the EU), it’s reporting strong growth (at 2.9% 2014), and offers a “top 10” standard of living in the EU.6)Wikipedia: Economy of the EU[[contid]]  This contrasts with the economic opportunities of the EU8 and EU2.  Slower growing economies in “old europe” such as Spain and Portugal have also caused increases in migrants moving to the UK for work purposes.7)Migration Advisory Committee: Migrants in Low-Skilled Work[[contid]]

Immigration

Another perceived “draw” for EU immigrants is the welfare system offered by the UK to immigrants.  David Cameron believes restricting EU immigrants’ access to the UK’s benefits system will reduce the number of EU migrants coming to the UK.  Whilst comparisons between welfare systems is difficult, MigrationWatch found “that the UK is the fourth most generous country of the EU15 ” behind Denmark, Luxembourg and Ireland.8)MigrationWatch: Comparison of UK Benefits with those of the EU14[[contid]]

2016 EU Membership Reform Negotiations

In February 2016, British Prime Minister, David Cameron, reached agreement with the EU’s 27 other member’s heads of states at the European Council that terms of the UK’s membership could be amended in order to deal with immigration concerns held by the Government, and as a condition of campaigning to remain in the EU.

The reforms he secured are as follows:

Access to In-work Benefits:  The UK will be allowed to limit newly arriving EU workers’ access to in-work benefits for up to four years, from when they start work.  The limitation will be graduated from zero up to the full entitlement of in-work benefits over the four year period.  This restriction only applies for 7 years however (an “emergency brake”) – after which – there will be no limits to the in-work benefits that newly arriving EU workers can claim.

Access to Child Benefit: The UK will also be allowed to “index” the amount of child benefit that an EU immigrant receives, where they are claiming child benefit for a child who is not resident in the UK.  This means that the payment will be less where the cost of living is less.  This only applies to new claimants from the time the measure is put in place.  And as of January 2020 this measure will be available to all of the EU’s member states, and will include other “exportable” benefits such as pensions.

In addition to the newly agreed measures above, the government has already reached an agreement on out-of-work benefits. Newly arriving EU migrants are banned from claiming jobseeker’s allowance for three months. If they have not found a job within six months they will be required to leave the UK. However, EU migrant workers who lose their job – through no fault of their own – will be entitled to the same benefits as UK citizens (including jobseeker’s allowance and housing benefit) for a period of six months.

Impact of EU immigration on UK

The Nature of EU Immigration

As the figures show, 67% of immigration to the UK from the EU is for work-purposes, of which 62% say they have a “definite job” and 38% are “looking for work”.9)ONS: Migration Statistics Quarterly Report, November 2015[[contid]]  This can be compared to non-EU migration for which far fewer – 26% – say they are are entering the UK for work-related reasons.

According to the Annual Population Survey for 2013, 47% of EU-born migrant workers are in “high skill” employment compared to 55% of workers from non-EU countries.  However when a distinction is made between the EU15 and EU8 & EU2 regions, the majority (62%) of migrant workers from the EU15 are in “high-skill” employment, whilst the majority of migrant workers (69%) from the EU8 & EU2 regions are in “low skill employment”.10)Migration Advisory Committee: Migrants in Low-Skilled Work[[contid]]

Immigration

As such, a split can be seen between the types of jobs that migrants from “old Europe” have in the UK, versus those of the newer EU countries – the EU8 & EU2.

A higher proportion of migrants from the EU entering the UK for work-related reasons supports the argument that migration from the EU is contributing to economic growth in the UK.  However it can also mean that migration from the EU is more likely to represent increased competition for jobs in both high skill and low skill sectors.  With newer members of the EU accounting for an increased proportion of immigration, it’s expected the numbers of migrants pursuing low-skill employment will continue to grow more rapidly than those seeking high-skill employment.

Social Cohesion

One of the most debated impacts of immigration is the threat to “social cohesion” – the concept of “togetherness” and “solidarity” – the establishing of trust and common social norms between people and communities. This can be extended to include the notion of shared national identity and levels of integration into society.

“Yes, it is impossible to build cohesive society with mass immigration”

Prime Minister David Cameron on Radio 4’s Today program

Social cohesion and integration are difficult to measure, with some suggesting that income inequality and deprivation are more significant factors when it comes to what constitutes social cohesion in the UK.11)Migration Observatory: Immigration, Diversity and Social Cohesion[[contid]]

“Our headline finding shows new immigration has no significant impact on local neighbourhood cohesion, it would be wise for policy-makers to focus on deprivation rather than migration in setting policy on cohesion and integration.”

Report to the Migration Advisory Committee, January 201212)Migration Advisory Committee: The Impacts of Migration on Social Cohesion and Integration[[contid]]

In the context of immigration from the various nations of the EU and non-EU countries, the debate is over what constitutes “mass immigration”, and what sources of immigration are likely to lead to more positive social cohesion and integration.  With so many factors playing a part and research patchy, it is likely to come down to people’s personal experience of EU immigration.  Issues such as speaking English and sharing similar cultural backgrounds can influence people’s interactions with EU migrants – and thus their judgements on the success of free movement from EU member states.

Pressure on public services

Another area often influenced by personal experiences and perceptions rather than hard data is the impact of immigration on public services.  For example, competition for school places, health care services, and housing.  Full Fact assessed the impact of migration on public services saying that:

“It is not possible to say with certainty what the implications of migration are for the cost, availability and quality of public services, and these impacts are likely to vary by area and depending on the type of public service.”

Full Fact13)Full Fact: Impacts of migration on local public services[[contid]]

The reason behind this was down to a “lack of information on the nationality or country of birth of people who use public services”, however they observed that migration increases the number of potential users of public services, and that migrants both contribute to the provision of public services (via taxes) and as workers involved in their provision.

Because of the lack of information it’s not easy to distinguish between the effects EU and non-EU migration has on public services, however as a whole – as Full Fact point out:

“. .. newly arriving migrants tend to be young adults … less likely to use adult social care and most health services than the UK born. . . .[and] more likely to have young children, and so they are expected to rely more heavily on education and maternity care.”

Full Fact14)Full Fact: Impacts of migration on local public services[[contid]]

That said, part of the problem as eurosceptics point out, is that public services find it harder to plan for the provision of these services without knowing exactly how many people may arrive from the EU next year alongside those coming from non-EU countries.15)BBC: More or Less: Calculating how much migrants cost or benefit a nation[[contid]]

Economic Growth

In November 2014 UCL published a widely publicised study which set out evidence for the positive impact of UK immigration from the EU.  The report found that EU immigrants who have arrived in the UK since 2000 contributed more than £20bn to UK public finances (via taxation) between 2001 and 2011, and contributed productive human capital that would have cost the UK £6.8bn in spending on education.16)UCL: Positive economic impact of UK immigration from the European Union: new evidence[[contid]]

The report found that immigrants from both the EU15 and A10 EU countries contributed more than they received, with EEA immigrants each contributing an average of £6,000 to the public purse more than they took out.17)BBC: More or Less: Calculating how much migrants cost or benefit a nation[[contid]]

MigrationWatch however claimed the UCL report was “based on most optimistic assumptions”, and challenged various aspects – particularly the finding that between 2001 and 2011 recent migrants from Eastern Europe (A10) had made a net public finance contribution of £5bn.18)Migration Watch UK: Response to UCL paper on the fiscal effects of immigration to the UK[[contid]]

Two of the assumptions which MigrationWatch found problematic in the UCL report were that new arrivals incurred the same corporate taxes and business rates as life-long UK residents, and that no money was sent home by these workers.  By their calculations, contributions from new member states between 2008 and 2011 turned negative, and EU15 contributions were significantly reduced – producing an overall cost to the UK of -£0.3bn for EU / EEA migration between 2001-2011.19)Migration Watch UK: Response to UCL paper on the fiscal effects of immigration to the UK – Briefing[[contid]]

Full Fact’s summary of the various studies can be found here, concluding that the fiscal impact of migration is relatively small accounting for less than 1% of the UK’s GDP and that all studies depend on the methodology and assumptions of the researchers. What does appear consistent is that migrants from the EU/EEA make a greater contribution (or less negative contribution) to the UK’s public finances than non-EU/EEA migration.

In terms of gross domestic product (GDP) per person (the standard measure of the prosperity of the inhabitants of a country), there is little data that differentiates between the impact of EU migration and non-EU migration – however for overall immigration, perspectives range from its impact being described as “very small”20)House of Lords: The Economic
Impact of Immigration[[contid]]
to there being “a positive and significant association between immigration and productivity”.21)NIESR: Migration and productivity[[contid]]

Emigration & Reciprocal Considerations

The UK’s participation in the free movement of people is a reciprocal arrangement – British citizens also have equal rights to live and work in any EU member state.

The estimated numbers of UK citizens currently living in other EU countries vary from around 1 million22)Migration Observatory: More than 1m UK-born Migrants in EU[[contid]] to 2.2 million based on 2010/11 figures.23)UK Parliament: Questions[[contid]]  This compares to 2.9 million EU citizens living and working in the UK.24)ONS: Population by Nationality and Country of Birth[[contid]]  For the year 2014, the ONS have 262,000 migrating into the UK from the EU, and 34,000 British citizens emigrating to the EU.25)ONS: Long-term Migrants[[contid]].

There is a general consensus that any attempt to apply restrictions and controls to immigrants from the EU will result in similar restrictions being applied on Brits who are residing – or intend to reside – in EU countries. This situation could arise from either a British exit from the EU or indeed a British renegotiation from within the EU.

The most popular destinations for British citizens leaving the UK are however non-EU countries26)Migration Observatory: Long-Term International Migration Flows to and from the UK[[contid]], so it seems fair to say that while the EU’s offer of “free movement” is a benefit, it’s not like the lack of free movement has prevented emigration to other, popular, non-EU destinations.

Emigration

If we Leave

Leaving the EU would “give the UK back control of its borders” – according to those that support leaving.  They argue that a UK outside the EU would be able to apply the same restrictions and controls on EU immigration, as which already exists on non-EU immigration.  Therefore, the Government would have the powers necessary to control total immigration figures.

However, supporters of Britain’s membership believe that leaving the EU would make no difference to migration to and from the UK.  This is because in order to maintain free trade, and the rights of those living and working in the EU, Britain would have to sign-up to the free movement of labour.27)Global Counsel: BREXIT: the impact on the UK and the EU[[contid]]  Supporters also think that if the UK did become more selective over of who enters the UK it would lead to a shortage of unskilled labour, adversely affecting business.28)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]

The opposing point is that leaving the EU would allow the UK to regain “complete policy freedom [which] provides the widest possible choice”.  Eurosceptics say the UK then has the opportunity to “access a wider global talent pool without the uncontrolled pressures of free movement” thereby creating a much “fairer” immigration policy.  They also propose that a version of free movement could be extended to economically “similar” nations outside Europe such as Australia, Canada, New Zealand and the USA, as well as being maintained with the more economically developed countries of western Europe (EU15 ).29)Telegraph: Immigration: Britain can only control who comes in if we leave the EU[[contid]]

If we Remain

The case for remaining in the EU is to continue to “benefit from free movement which has allowed for UK citizens to live, study, set up a business, work and retire across the EU [and] enable British companies and organisations to meet critical skills shortages easily (e.g. in the NHS)”.30)British Influence: Prosperity[[contid]]

Supporters of Britain’s membership argue that in addition to opportunities for British citizens and business, the nation would continue to benefit from the economic gains of free movement.  EU immigrants are generally young and thus “more likely to be in work than Britons, and thus put more in than they take out in benefits and public services”.31)CER: Is immigration a reason for Britain to leave the EU?[[contid]]

Opponents of ongoing membership say that the EU is fully committed to maintaining “free movement”, and by remaining in the EU the UK will continue to be subjected to uncontrolled EU immigration – responsible for “depriving British citizens of jobs in the low-skilled end of the labour market” and putting pressure on public services.  Opponents also point out that immigration from the EU is increasing, and is likely to increase further – not least because of the EU’s commitment to expansion, with the additions of the Balkan states and Turkey “likely to supply a fresh influx of workers”.32)The Week: Turkey and the EU: the pros and cons of membership[[contid]]

Summary

Immigration is a complex matter where much research is either incomplete, inconclusive, inconsistent or constructively interpreted by political agenda and opinion. As such we recommend reading from a variety of sources and referring directly to the source data wherever possible.Nonetheless here are some key observations:

  • Today, EU immigration accounts for just under half of all net immigration into the UK.
  • Unlike immigration from non-EU countries, EU immigration cannot be controlled by the UK because of Britain’s obligation to “free movement” through its EU membership.
  • Research and opinion is divided or inconclusive on the economic benefits of both immigration and EU immigration, and its impact on other key areas such as public services, employment and social cohesion.
  • Most immigration from the EU is for work purposes and the fastest growing source of EU immigration into the UK is from Romania and Bulgaria (A2 ).
  • Significant numbers of British citizens make use of the EU’s “free movement” by living and working in EU countries, however the most popular emigration destinations for Brits are non-EU countries.
  • Both sides acknowledge that free movement (in some form) is the likely price for maintaining current levels of access to the EU/EEA single market.
  • The crux of the debate is over the importance of having the option to control UK immigration policy.

References   [ + ]

Foreign Affairs

The European Union claims that “acting together gives the EU’s 28 members far greater clout than they would have if each pursued its own policies.”1)European Union: Foreign & Security Policy[[contid]]

Supporters of the UK’s EU membership say that our influence and security interests are best served by maintaining our position within the EU, rather than from outside.

Opponents to the UK’s membership argue the opposite is true – outside of the EU the UK would be free to represent its own interests, rather than those of the EU – and the EU itself has no real power to project and enforce its policies.2)RT: UKIP founder Alan Sked: EU foreign policy a fraud, no power to project in the world[[contid]]

Foreign Policy, National Security and the EU

Whilst the UK has its own policies3)UK Government: Foreign Affairs[[contid]], the EU is also active in matters of foreign affairs and security.4)European Union: Foreign & Security Policy[[contid]]  The premise is that when all member states act together they have “far greater clout” than they would if each country pursued its own policies independently.

As the EU explains, its foreign and security policy seeks to:

  • Preserve peace & strengthen international security.
  • Promote international cooperation.
  • Develop & consolidate a) democracy, b) the rule of law, c) respect for human rights & fundamental freedoms.

Developmental & Humanitarian Aid

Together, the EU and its 28 member states are the world’s largest donors of international aid, spending €56.5 billion in 2013 “helping countries across the world in their fight against poverty”.5)EU: EU development aid[[contid]]  Of this €18.6 billion in 2013 was provided directly by EU institutions, of which around 10% was for emergency relief “humanitarian aid” (€1.17bn in 2014).  Details on the EU’s developmental and humanitarian aid donor activity can be found here.

The EU claims to offer “economies of scale and reduced administrative costs” for managing aid.  It also aims to offer advantages in preventing fraud and corruption, as well as putting humanitarian needs ahead of foreign policy or strategic goals.6)CER: Priorities for EU development aid[[contid]]

Despite this 80% of aid continues to be managed by individual member states’ Governments.

Diplomacy

The Lisbon Treaty brought about the formation of the EU’s common diplomatic service – the European External Action Service (EEAS).

The EEAS is designed to be complementary to the diplomatic services of individual EU states, and when combined they constitute the biggest diplomatic staff in the world.  The EEAS itself represents the EU in more than 140 capitals and international organisations, with staff of 3,000 people and an annual budget of €500 million.7)Euractiv: A European diplomatic service in quest of a foreign policy[[contid]]

According to the EU, it maintains partnerships with the world’s key players including China, India and the United States – ensuring relationships over areas including education, the environment, security & defence are based on mutual interests and benefits.8)European Union: Foreign & Security Policy[[contid]]

Much like on aid, EU initiatives on diplomacy are designed to introduce cost and efficiency savings, and ultimately are capable of performing all diplomatic functions particularly for smaller EU members.9)Euractiv: A European diplomatic service in quest of a foreign policy[[contid]]

Due to its size and collective influence, the EEAS has raised concerns in the UK that it represents “a growing threat to British influence” . . . “particularly felt in international institutions, where increasingly the EU corporately occupies the place and function once filled by British diplomats.”10)Telegraph: The EU is stealing Britain’s diplomatic influence – and so we must leave[[contid]]

Peacekeeping

The EU has an active interest in peacekeeping. An example of this was in August 2008 when the EU helped broker a ceasefire between Georgia and Russia, and deployed EU observers to monitor the situation.11)European Union: Foreign & Security Policy[[contid]]

Security

One of the key objectives of the EU is to promote security for EU countries.  The Paris terror attacks in 2015 put the EU’s security role firmly onto the agenda, and there’s fierce debate as to whether the EU is a help or a hindrance in the fight against organised crime and international terrorism.

Supporters argue the EU is vital in terms of promoting security and intelligence cooperation between member states, while eurosceptics point to how the EU’s policies on free movement have enabled criminals to move around more easily.

The EU has its own law-enforcement agency – Europol – whose purpose is to assist EU member states’ own police and security forces to tackle serious international crime and terrorism.

The european arrest warrant (EAW ) is one of the EU’s most significant cooperative security measures – requiring a member state to arrest and transfer a criminal suspect or sentenced person to the arresting state so that the person can be put on trial or be imprisoned.

Critics of the EAW say it’s a serious infringement of the UK’s criminal justice system that favours procedural simplicity over the rights of suspects and defendants.  They argue the threshold for what constitutes a ‘serious crime’ is too low and that no evidence of the crime needs to be supplied – which often results in expensive extraditions of EU nationals for minor offences.  One example used is when £30,000 was spent sending a Pole back from London to Warsaw to face charges of 100 outstanding parking tickets.12)Guardian: The European arrest warrant: what is it and will the UK opt back in?[[contid]]

Supporters of the EAW though say that it is vital for helping defend Britain against serious criminals who have fled abroad.  Examples include, (convicted murderer) Jason McKay who was arrested in Warsaw and sent back to the UK (to stand trial for murder), and fugitive teacher Jeremy Forrest, who fled to France with a schoolgirl and was extradited to England on an EAW issued in September 2012.13)BBC: Q&A: European Arrest Warrant[[contid]]

An independent review by Lord Justice Scott Baker in 2011 concluded that the EAW “improved the scheme of surrender between Member States and that broadly speaking it operates satisfactorily”.14)Home Office: A Review of the UK’s Extradition Arrangements[[contid]]  However Fair Trials International (FTI) contested this view saying “thousands of extradition requests are made and granted each year. Whether they result in final surrender of the requested person or not, they have a significant impact on people’s lives (and in many cases their livelihoods) and use significant public funds.”15)Fair Trials International: Briefing on European Arrest Warrant findings: October 2011[[contid]]

Whilst the UK has an opt-out on EU police and criminal justice legislation, it has opted in to the majority of measures.

Military Capability

Under the EU’s Common Security and Defence Policy (CSDP) the EU has carried out 30 civilian missions and military operations on 3 continents, in response to crises such as post-tsunami peace-building in Indonesia, protecting refugees in Mali & the Central African Republic and fighting piracy off Somalia and the Horn of Africa.16)EU: About CSDP – Overview[[contid]]

The EU relies on forces contributed by EU countries, and since 2007 has been able to “carry out rapid-response operations with 2 concurrent single-battle groups, each comprising 1500 soldiers.”  The Council of Ministers (Council the EU), with ministerial representation from all member states, decides on deployments.

What many perceive as a natural progression of the CSDP is the creation of an EU army.  The political will for an EU army appears to have increased over the last few years, with European Commission President, Jean-Claude Juncker, saying that “a common European army would convey a clear message to Russia that we are serious about defending our European values.”17)BBC: We need a European army, says Jean-Claude Juncker[[contid]]

The idea for an EU army had notable support from German Defence Minister, Ursula von der Leyen, saying “Our future as Europeans will at some point be with a European army”.18)BBC: We need a European army, says Jean-Claude Juncker[[contid]]  Perhaps more surprisingly, the idea also has solid support from Europeans – EU research finding that “a clear majority of Europeans are now in favour of the creation of a European Union army (55%, +9 percentage points since January 2014), while 37% (-10) are opposed and 8% (+1) gave no opinion.”19)European Commission: Public Opinion in the EU[[contid]]

Public Opinion

Despite this many member states including the UK are against the idea, David Cameron spoke against an EU Army in 2013 saying “It makes sense for nation states to co-operate over matters of defence to keep us safer…But it isn’t right for the European Union to have capabilities, armies, air forces and all the rest of it. We need to get that demarcation right.”

Other commentators and analysis suggests that pooled military capability won’t produce economies of scale or foster collaboration, or improve consensus on foreign policy.  Others also say that the real defense force for Europe is NATO “because of the crucial role played by the American nuclear deterrent”.20)Eutopia: Debate on EU Army[[contid]]

How influential is the EU

The EU undoubtedly wields significant power on the world stage – whilst only having 7% of the world’s population, the EU’s trade with the rest of the world accounts for around 20% of global exports and imports, it has the world’s second largest currency, and the largest share of global GDP.  The combined military spend of all its members is €190bn (2012)21)Wikipedia: Military of the European Union[[contid]] (the United States spends about $554.2 billion annually).

EU Economies

Furthermore, its sphere of influence is growing, with the EU keen to take on more responsibility in foreign policy matters.

British influence in the EU

Alongside Germany and France, the UK is one of the “Big Three” – the only countries in the EU that “can still rely on their own weight to influence developments and are less dependent on multilateral institutions”.22)Carnegie Europe: The Big Three in EU Foreign Policy[[contid]]

As the EU has expanded, the UK’s share of representation in all of the EU’s bodies has decreased accordingly.  Today it has 9.5% share of the vote in the European Parliament23)EU: European Parliament[[contid]], around 8% in the Council of the EU24)EU: Council of the EU[[contid]], and 4% in the European Commission.25)EU: European Commission[[contid]]  While the Parliament and Commission take decisions by simple majority, the Council of the EU works on a qualified majority which now also requires the approval of member states accounting for 65% of the EU population – of which the UK has 13%.26)Council of the EU: QMV[[contid]]

Influence

2016 Membership Reform Negotiations

As part of the “new settlement for the UK within the EU”, EU leaders agreed that

“[EU] measures [which] further deepen economic and monetary union, will be voluntary for Member States whose currency is not the euro”.

Whilst this gives the UK and other non-eurozone members an effective opt-out of economic policies associated to strengthening the euro, it is also clear that no country can veto such measures:

“Member States not participating in the further deepening of the economic and monetary union will not create obstacles to, but facilitate such, further deepening…”

The agreement goes on to say that deepening integration around the euro will respect the rights and competencies of non-eurozone members, ensure coexistence and consistency, and the “level-playing field and the integrity of the internal market”.27)European Council: Conclusions, 18-19 February 2016[[contid]]

Of course, eurozone countries will continue to hold the balance of power in the EU, and this agreement ensures that they can progress unhindered on a path of deeper integration.  However it also frees non-eurozone members from any commitment to going along with economic policies for the eurozone, and exempts them from any commitment to financially contributing towards bailing out the euro.

It’s also important to note though that the 75-80% of decisions within the Council of the EU are by consensus – i.e. they are never actually put to the vote because member state representatives have worked together to seek an agreement that all countries can support.28)Kings College London: Does the UK win or lose in the Council of Ministers?[[contid]]

Where votes do take place, in the period 2009 to 2015, the UK has been on the “losing side” more often than any other member (12.3% of the time), ahead of Germany and Austria (both 5.2% of the time).  Of course this also means that the UK was on the “winning side” 86.7% of the time, and researchers are keen to point out that the UK may be more willing than most to “register its opposition”, and that “bargaining behind the scenes” isn’t accounted for.29)Kings College London: Does the UK win or lose in the Council of Ministers?[[contid]]

The extent of Britain’s influence in the EU is the subject of much debate, however both sides tend to acknowledge that: a) most influence comes through forming alliances with other member states, and b) the combined voting strength of the 19 eurozone countries is significant and, in theory, could impose changes on other EU members.30)Global Counsel: BREXIT: the impact on the UK and the EU[[contid]]

One useful measure of influence therefore within the EU is the level of cooperation between Governments. The LSE found that the UK “was the most common country for states to say they worked with”, ahead of France and Germany.31)LSE: UK influence in Europe series: Is the UK at the top table in EU negotiations?[[contid]]

Influence

British influence in the World

When it comes to “soft powers” (the use of attraction and persuasion to influence outcomes) the UK is reportedly “the most powerful nation on earth” according to one analysis (2012).32)Independent: Britain is now most powerful nation on earth[[contid]]  Whilst the source of this form of influence is culture, political values and diplomacy it is undeniably a major asset to the UK – and of course it exists whether the UK remains in the EU or leaves the EU.

In the case of “hard powers”, the UK is the world’s 5th largest economy by GDP (2014)33)Wikipedia: List of countries by GDP[[contid]] and the 5th biggest military spender (2014).34)Wikipedia: Military budget[[contid]]  The UK is also the second largest provider of foreign aid ($19bn in 2014)35)Wikipedia: Aid[[contid]], and a member of the G8, the G20, the IMF, the World Bank, the OECD, IEA, the UNSC, the FSB, and the UNFCC.36)Global Counsel: BREXIT: the impact on the UK and the EU[[contid]]

Influence

Influence

Influence

Of course Britain’s influence is greater in some areas and less so in others, and influence will always be relative to the size and weight of other nations in the room, and the degree to which you are trying to influence or sway the consensus.

A number of commentators believe the UK’s influence on the world stage has waned in recent times.  The reasons for this include us being preoccupied with “internal arguments”, the uncertainty around EU membership, a lack of decisive decision making in Middle Eastern affairs and comparatively small contribution to foreign military operations.37)Slate: Lax Britannica[[contid]]

Some argue that the EU is the reason the UK has any influence at all on the world stage – whereas others say the EU is compromising the UK’s position on the world stage.  Without actually leaving it’s impossible to say for sure how much of an impact the EU membership has – or doesn’t have – on the UK’s level of global influence.  What is certain is that under an exit scenario the UK would inevitably have to commit more resources in order to assert itself on the world stage.

If we Leave

Opponents of Britain’s EU membership say that by leaving the EU the UK can represent itself on the world stage and trade globally to ensure peace and prosperity.

They argue that the UK’s influence could be best exerted individually and “would see more freedom of action for the Foreign and Commonwealth Office (FCO), retain its seat on the United Nations Security Council (UNSC), retain membership of key international bodies, and be able to work with the EU as it sees fit”.38)Telegraph: The EU is stealing Britain’s diplomatic influence[[contid]]

On matters where collaboration is of mutual interest, such as countering cross-border crime and terrorism, eurosceptics argue that Britain could effectively counter cross-border crime through a bilateral treaty with the EU.39)FT: Tory and Ukip team up to fight EU arrest warrant[[contid]]

They also say that as an english-speaking nation, with a major economy, vast resources in research and innovation, as well as huge cultural output, the UK “can gain from engaging more fundamentally with the rest of the world, and vice versa”.40)Leave.eu: On Global Influence[[contid]]

Supporters of Britain’s EU membership on the other hand say that by leaving the EU “the UK (and the EU) would enter an extended period of economic and political dislocation before arriving at a new, mutually diminished modus vivendi.”41)Chatham House: Britain, Europe and the World[[contid]]

They also argue that the UK would still be forced to deal and negotiate with the EU on foreign policy issues but from the outside – a situation that is far less likely to produce EU policies that are in Britain’s interests.42)Chatham House: Britain, Europe and the World[[contid]]

The UK may lose influence in international fora, such as the UNFCCC, where collaboration among EU states has helped the UK sway international negotiations.  The UK may also find its diplomatic heft is reduced.  While the UK would remain a significant military partner for the US, it may be less able to leverage this to pursue broader international objectives, and may no longer be the European partner of choice on non-military matters.

Supporters, including David Cameron, also say that leaving the EU would be a risk to the UK’s national security43)Express: Cameron to warn national security will be AT RISK if Britain leaves EU[[contid]], and point to the findings of Joint Committee that “the UK’s future relationship with the EU is vital to the UK’s national security”.44)UK Parliament: Joint Committee on the National Security Strategy[[contid]]

A House of Commons assessment of an EU exit, theorised that “acting through the EU means a larger aid budget, the promise of access to the largest consumer market in the world and a louder political voice. . .” and that “if the UK no longer coordinated its policy with Member States, it would lose access to these shared tools.”  However is also pointed out that many UK actions are taken in conjunction with the US rather than the EU and that “the UK’s ability to project military power would be largely unaffected, any military shortfalls could be compensated for through bilateral arrangements.”

The same report concluded that on matters of policing and national security “the question would be whether the UK would have the necessary goodwill from, and influence over, other States to achieve the results it desired”.45)House of Commons: Leaving the EU[[contid]]

If we Remain

Supporters of the UK’s EU membership argue that for Britain to be a leader in the world, it “needs to be in Europe helping to take the big decisions – not sitting on the sidelines, powerless”.  They add the UK has “more control over its destiny by staying inside organisations like the EU”.46)Britain Stronger In Europe: Stronger Leadership[[contid]] and that “…being a major player in a strong regional institution can offer a critical lever for international influence.”47)Chatham House: Britain, Europe and the World[[contid]]

By remaining in the EU, the UK would have “the opportunity to use [its] economic size, diplomatic skills and networks, and broader national capabilities to play a leading role in defining and leveraging more effective EU-wide policies on trade, energy, foreign affairs, security and the single market.”48)Chatham House: Britain, Europe and the World[[contid]]

The UK will be “more secure as part of Europe than on our own”49)Britain Stronger In Europe: Stronger Security[[contid]], and that our membership of the union makes it easier to share intelligence and ultimately catch criminals and terrorists.50)Huff Post: Quitting The European Union Would Make Britain Less Safe[[contid]]

They refer to recent comments by US President Barrack Obama and other foreign officials that urge the UK to remain part of the EU, in order to maintain the UK’s influence on the world stage.

Opponents of the UK’s EU membership fear that a vote to remain in the EU will be an unwelcome vote of confidence in the EU ‘project’, and will therefore give future leaders less influence to reform and challenge the other member states.  They are concerned that a ‘remain in’ vote will be seen as a mandate by EU leaders to continue unchanged with the EU project, and forge even closer union over foreign policies.

They present the case that – when it comes to diplomacy – remaining in would see the UK continue to be ‘double represented’ and increasingly ‘replaced’ by the EU on the world stage.  Eurosceptics point to the fact that member states are resisting using the EU to distribute foreign aid and provide diplomatic services because they see these as important factors in maintaining their own international influence – and for aid in particular its “the member states who pay but the EU who gets the credit”.

Summary

  • The EU has its own foreign and security policy, which is designed to compliment EU members own policy initiatives – but which has been criticised for duplicating effort and competing for influence.
  • Certain groups within the EU support progression to more pooled resources which seem likely to include military capabilities – a European army – at some point.
  • The UK is probably more influential within the EU than most would think by virtue of being one of the “big 3” and its “soft powers”.
  • The EU is a major force on the world stage and wields significant clout when it comes to implementing standards and negotiating on trade.
  • The UK’s position in the world is the subject of some debate, and membership of the EU could be either a help or a hindrance.
  • Protecting the UK’s EU trade, security collaboration and influence from the outside would rely largely on how prepared the EU is to work with the UK.
  • The UK still has its own foreign policy objectives, control over its own foreign affairs, and an advanced military and security capability, so leaving the EU would not leave a void in these areas; however the UK would have to work hard to assert itself in a world of trade blocs, more protectionist emerging economies, and transient security challenges.

References   [ + ]

Civil Liberties

A number of high profile human rights rulings made by the European Court of Human Rights (ECtHR ) have been heavily criticised in the UK.  Such rulings have been cited as a reason for the UK to look at alternatives to the ECHR. Some believe it’s also as a reason to leave the European Union – the allegation being that whilst the UK is a member of the EU, the UK will always be subservient to the ECtHR and compelled to abide by its rulings – whether it agrees with them or not.

However the ECtHR and the EU are two separate bodies and there are 46 other countries including many outside of the EU who are signatories to the ECHR and subject to the rulings of the ECtHR – Russia being one.

To establish whether human rights and civil liberties legislation should play a part in the EU Referendum question, we have to first determine the extent to which the EU has a hand in dictating the rules that Britain has to comply with.

Human Rights Law in the UK

Europe first became involved in human rights law in the aftermath of the Second World War when the 1950 European Convention on Human Rights (ECHR ) was drawn up by the Council of Europe, with the help of British lawyers.1)Guardian: What is the European convention on human rights?[[contid]]

As a signatory to the ECHR , Britain is legally bound to protect the rights and freedoms of its citizens by complying with the rules of the convention and respecting the rulings of its supreme court – the European Court of Human Rights (ECtHR).

Britain’s Human Rights Act (HRA) of 1998 incorporated the ECHR into domestic law requiring that judges in UK courts legislate in line with the ECHR.  It’s also against the law for a UK public authority to act in a way which infringes on any human rights set out in the Convention.

Criticism of the ECHR & HRA

In order to protect the rights of individual EU citizens (and hold Governments to account), the European Court (ECtHR ) had to be established as a supranational body with powers vested in it to rule against domestic Governments.

This has led to criticism that the ECtHR is eroding the democratic process, undermining the “sovereignty of Parliament” and the powers of the UK Supreme Court.  Others disagree with this assessment, pointing out that The Human Rights Act (HRA) only requires courts to “take into account” decisions of the ECtHR; or that by having the ultimate power to withdraw from the ECHR ultimate sovereignty does still lie with the UK – albeit via a “nuclear” option.2)Guardian: Senior judge: European court of human rights undermining democratic process[[contid]]3)Open Democracy: When judges disagree – the ECHR and British sovereignty[[contid]]

The debate over where supreme decision-making powers lie – and should lie – becomes all the more heated when high profile rulings are made against the British Government, and are perceived by many as wrong.  Examples include the refusal of a Home Office order to deport the hate preacher Abu Qatada; a ruling that life imprisonment amounted to “inhuman and degrading treatment”; and a ruling that prisoners can’t be prevented from voting in elections.4)Daily Mail: One in three cases lost by Britain at the European Court of Human Rights are brought by terrorists, prisoners or criminals[[contid]]5)UK Human Rights Blog: Convicted murderers win Article 3 case against whole life sentences in Strasbourg[[contid]]6)BBC: UK prisoner voting rights breached, European judges rule[[contid]]

Whilst only a small number of applications to the ECtHR make it through to final judgement (3% of cases in 2014) – of those that do, around half result in the court ruling against the UK (21 cases out of 50 in 2012-14).7)Full Fact: The UK’s record in human rights cases[[contid]]

There is also some debate over the role the ECHR plays in immigration.  Article 8(1) of the ECHR promotes the right to a private and family life.  This provides a way for immigrants in all parts of the world to join family in the UK.  Family-related immigration accounts for about ⅓ of all EU and non-EU immigration, and the present Government has concerns as to how these rights are interpreted and applied in immigration cases.8)Home Office: Family Migration A Consultation[[contid]]

A British Bill of Rights?

Frustrated by such judgements, the British Government is currently exploring measures to restore ultimate decision-making powers to the UK Supreme Court, including the option of replacing the ECHR with Britain’s own “Bill of Rights“.

The Home Secretary, Theresa May, outlined the Government’s position saying the Government “. . . will scrap the Human Rights Act, and . . . we should also consider very carefully our relationship with the European Court of Human Rights and the Convention it enforces. . .”9)Independent: Theresa May’s speech leaves Tories in no doubt[[contid]]

Human Rights

Any plan to withdraw from the ECHR in its entirety faces significant opposition both from within the Government and human rights campaigners.10)UK Human Rights Blog: Incoherent, incomplete and disrespectful: The Conservative plans for human rights[[contid]]

“Any human rights instrument which didn’t create tension for Government wouldn’t be doing its job.”

Angela Patrick, Director of Human Rights Policy at JUSTICE11)UK Human Rights Blog: Incoherent, incomplete and disrespectful: The Conservative plans for human rights[[contid]]

In June 2015, Justice minister Dominic Raab attempted to clarify the Government’s position saying:

“Our plans don’t involve us leaving the convention, that’s not our objective, but our number one priority is to restore some balance to our human rights laws so no option is off the table.”12)Independent: Ministers confirm they are prepared to leave the European Convention on Human Rights[[contid]]


Any Bill of Rights or change to the UK’s Human Rights Act is likely therefore to focus on restoring sovereignty to the British Supreme Court and effectively demoting the ECtHR to an advisory role.

The EU Connection

The European Union and the European Court of Human Rights (the enforcing court of the ECHR ) – are two distinctly separate entities.  That said, it is too simplistic to deny any connection, simply because:

  • All 28 existing members of the EU are signatories to the ECHR.
  • All new members joining the EU are legally bound to ratify the ECHR into their respective domestic laws.
  • The ECHR is specifically mentioned as a general principle of EU membership.
  • The EU itself intends to become a signatory to the ECHR.

While the EU treaty stops short of legally compelling an existing EU member such as Britain to adhere to the ECHR, it is very clear in what’s expected of a member state:

Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law.

Treaty on European Union, Article 6.313)Treaty on European Union: Article 6.3[[contid]]

Human Rights

It is also worth noting that the EU has its own Charter of Fundamental Rights, enshrined in the Lisbon Treaty, which allows EU citizens to contest rights set down in EU law at the EU’s own European Court of Justice (ECJ).  The UK negotiated an opt-out of this but the extent to which the UK is still “obliged” to comply with the provisions of the charter and rulings of the ECJ is disputed.14)Bailii: Court of Justice of the European Communities, Para. 120[[contid]]

Can we leave the ECHR without leaving the EU?

The British Government’s plans to restore sovereign decision making powers to the UK’s Supreme Court are based on a belief that it is viable for the UK to withdraw from the ECHR (and / or extract itself from of ECtHR’s rulings) without breaking its EU membership commitments.

So can it?

There is substantial debate over this.  Whilst most agree that adherence to the ECHR is not currently a compulsory legal requirement of Britain’s EU membership, there is reason to believe that it is an inferred obligation of membership, and that any separation between the two may become increasingly hard in the future.

Some are adamant that it’s just not possible to remain in the EU but leave the ECHR, like Lord Falconer the Shadow Justice Secretary who said “. . . to all intents and purposes, I believe it is not possible to be a member of the European Union and to have left of denounced the European Convention on Human Rights”.15)House of Commons: Is adherence to the European Convention on
Human Rights a condition of European Union membership?[[contid]]

Human Rights

Others – like the Government – believe the opposite: that the UK can remain in the EU and pursue our own human rights legislation, as Rosalind English of 1COR states: “Nothing in the relevant EU treaties requires continued adherence to the ECHR as a condition of continued UK membership of the EU. . . if they had meant to say that, they would have said it”.16)UK Human Rights Blog: It’s time we packed our bags at Strasbourg, says report[[contid]]

Human Rights

Crucially though, the EU itself intends to become a signatory to the ECHR itself, which “would make it more difficult for any [EU member] state to retreat from the ECHR”17)Uk Human Rights Blog: EU judges oppose accession of EU to ECHR[[contid]]

Human Rights

Whilst it may be technically feasible for the UK to leave the ECHR whilst remaining a member of the EU, the practical and political implications of doing so may prove more restrictive.  Dominic Grieve QC, the former attorney general, believes there would be wider consequences involving “costs to our influence, reputation and national interest”, and possibly making the whole ECHR unworkable:18)UK Human Rights Blog: Is the European Convention Working? Grieve advocates before Faculty of Advocates[[contid]]

“If the UK will not observe and promote [the ECHR’s] terms, why should other member states?”

Dominic Grieve QC19)Guardian: Tory plans will destroy human rights across Europe, warns Dominic Grieve[[contid]]

Commentators have also pointed out that even if an EU member state denounced the ECHR it would still be bound to adhere to the terms of the convention in matters falling under EU jurisdiction as well as other International treaties.20)UK Human Rights Blog: What would happen if the UK withdrew from the European Court of Human Rights?[[contid]]

If we Leave

If the UK leaves the EU then it has both options available: the UK could choose to continue as a committed member of the ECHR, or pursue its own Human Rights legislation, or a combination of both.

With strong opposition to a full withdrawal from the ECHR, it is possible that the UK could remain party to the ECHR even if the UK leaves the EU.  Leaving the EU could actually relieve some of the pressure to leave the ECHR and restore powers, or it could add to it – depending on your perspective.

If we Remain

If Britain votes to remain in the EU then any withdrawal from the ECHR or reclamation of sovereign powers over human rights matters appears unlikely – despite the intentions of the Conservative Government.

Whilst the opportunity to withdraw from the ECHR without affecting our EU membership may continue to be possible in the strictest legal terms, in practice it appears fraught with difficulty.  The EU is clear that it expects existing EU members to be in the ECHR and the EU itself has plans to sign up to it.

Equally, should the UK try to demote the ECtHR to an advisory role whilst remaining an EU member, it places the UK at odds with both the EU and the EU’s other 27 member states.

Summary

  • Britain draws its human rights laws from the European Convention on Human Rights (ECHR ) and is expected to comply with the rulings of the European Court (ECtHR ).
  • The ECtHR and the EU are separate entities but EU membership places certain obligations on EU members to adhere to and uphold the ECHR.
  • High profile defeats for the UK at the ECtHR have fuelled criticism of the Court and its interpretation of the ECHR, prompting the UK Government to look at ways to return ultimate decision-making power to the UK Supreme Court .
  • There is significant debate over whether this can, in practical terms, be achieved whilst the UK is a member of the EU.
  • Voting to remain in the EU is likely to make it more difficult for a British Government to repatriate powers over human rights matters.
  • Voting to leave is likely to make it easier, but would also allow for the option of remaining a member of the ECHR.

References   [ + ]

Living & Working in EU

Britain’s membership of the EU gives us the right to live and work anywhere in the EU, and EU citizens the right to live and work in Britain.  The opportunity for Britons to live & work elsewhere in the EU is one of the more popular aspects of EU membership, but granting EU citizens the same rights in the UK is one of the least popular.

There are concerns that if the UK were to leave the EU our own citizens could be adversely affected as the EU match any measure or restriction the UK applies to EU citizens entering or residing in the UK.

Background to free movement & EU citizenship

Providing citizens of the EU “freedom of movement” within its member states is one of the founding principles of the EU, and was established by the Treaty of Maastricht in 1992.

“Citizenship of the [European] Union confers on every citizen of the Union a primary and individual right to move and reside freely within the territory of the Member States . . . The free movement of persons constitutes one of the fundamental freedoms of the internal market, which comprises an area without internal frontiers, in which freedom is ensured . . .”

Directive 2004/38/EC of the European Parliament and of The Council1)EU: Directive 2004/38/EC of the European Parliament and of The Council[[contid]]

In 1994, the EU’s freedom of movement (persons, goods, services and capital) expanded to the European Economic Area (EEA) which included non-EU members who are members of EFTA (the European Free Trade Area), namely Norway, Iceland and Liechtenstein.

Freedom of Movement

Britain’s EU membership therefore entitles any UK citizen “the right to work in any country in the European Economic Area (EEA) without a work permit . . . [and] you’ll have the same rights as nationals of the country you’re working in when it comes to: working conditions, pay, social security (e.g. benefits)”.2)UK Government: Work in another EU country[[contid]]

Popularity of free movement

The freedom to travel, study and work anywhere in the EU ranks as “the most important representation associated with the European Union”, with 49% of citizens surveyed mentioning it.  It’s importance to British people however is less – with 39% mentioning it.3)European Commission: Eurobarometer Public Opinion, May 2015[[contid]]

Freedom of Movement

Whilst British people have the right to live and work anywhere in the EU/EEA, the most popular destinations for British citizens are in fact non-EU countries (accounting for 73% of ‘next residence’ destinations in 2014) with Commonwealth countries proving the most popular.  Australia & New Zealand combined are more popular a destination than the whole EU for example.4)ONS: Migration Statistics Quarterly Report, November 2015[[contid]]

The popularity of emigration to Commonwealth countries is born out by research conducted by YouGov in November 2015 which suggested more British people would support free movement between Commonwealth countries than they would EU countries.5)YouGov: Freedom of movement within Commonwealth more popular than within EU[[contid]]

Dissatisfaction with free movement into UK

The EU’s “freedom of movement” is however one of the most challenged aspects of the UK’s EU membership when it comes to providing such freedoms to immigrants from EU countries.

As we discuss in more detail in our Immigration section, Britain is an attractive destination for EU citizens and the inflow of migrants from EU countries represents an increasing proportion of the UK’s overall immigration figures.

The EU’s own research identifies that immigration is one of the most important issues which British people think the UK is facing at the moment, with 35% of people listing it (versus an EU average of 23%).6)European Commission: Eurobarometer Public Opinion, May 2015[[contid]]

EU Reform

Rights and Access to Benefits

It’s estimated that somewhere between 1 and 2.2 million British citizens live within the EU, and there is general consensus that any attempt to apply restrictions and controls to immigrants from the EU will result in similar restrictions being applied on Brits who are residing – or intend to reside – in EU countries.
In January 2015, the Guardian published findings to suggest that “30,000 British nationals are claiming unemployment benefit in countries around the EU. . . representing 2.3% of “1.3 million UK citizens living elsewhere in the EU”.7)Guardian: Revealed: thousands of Britons on benefits across EU[[contid]]  Whilst the research doesn’t take into account other forms of benefits such as in-work benefits or housing benefit, the comparative figure given for EU citizens drawing Jobseeker’s Allowance (JSA) in the UK was 65,000.  It’s this perceived “inequality” that has prompted David Cameron to put access to benefits on his list of renegotiation reforms.

2016 EU Membership Reform Negotiations

In February 2016, David Cameron concluded negotiations with the other 27 heads of EU member states at the European Council, and reached agreement on various measures that could in turn affect UK citizens living and working abroad.

These reforms apply if the UK votes to remain a member of the EU, so changes to the conditions of British citizens could occur whether the UK votes to remain or leave the EU.

As the EU strives for equality and non-discrimination, it is reasonable to expect that other EU member states could also implement the measures and powers that have agreed for the UK. One example is the indexation of “exported” Child Benefit payments, which will be available to all members from 2020.  Similarly, the 7 year “emergency brake” mechanism, designed to allow the UK to restrict EU migrant access to in-work benefits, is also available to other member states should they also experience an ‘inflow of workers from other Member States of an exceptional magnitude over an extended period of time’.

The agreement does make clear however that the “indexation” of exportable child benefits should not be extended to other types of exportable benefits, such as old-age pensions; which offers some assurance to British pensioners living abroad.8)European Council, Conclusions 18-19/02/2016[[contid]]

If we Leave

According to a Government Research paper analysing the likely impact of an EU exit:

“If a UK withdrawal meant the end of free movement rights, . . . [it] might also have implications for UK nationals living in other EU/EEA countries, since Member States would be free to impose corresponding restrictions on entitlement to their benefits.”9)House of Commons: Exiting the EU[[contid]]

So the impact on British rights to live, work and access benefits anywhere in the EU will largely depend on the extent to which the UK wants to distance itself from “free movement”.  The UK could well choose to keep “free movement” in exchange for maintaining free trade arrangements as part of the European Economic Area (EEA).  Alternatively it may negotiate an “ad hoc” (as needed) solution which allows free movement to some degree, or there could be no formal agreement where national and EU laws govern what happens next.10)EU Law Analysis: What happens to British expatriates if the UK leaves the EU?[[contid]]

Should no formal agreement be reached (a worst case scenario), it’s suggested that existing laws could necessitate visa requirements, increase checks on entry into the EU, make it harder for family members to join, introduce restrictions on movement within the EU, as well as less equal treatment for UK students hoping to study in the EU.11)EU Law Analysis: What happens to British expatriates if the UK leaves the EU?[[contid]]

However, in the event of a Brexit it’s broadly expected that a negotiation would take place safeguarding the majority of rights for UK citizens abroad in exchange for safeguarding those of EU citizens already in the UK.  International law may also offer some guarantees that already “executed” rights would be protected.12)House of Commons: Research paper “Leaving the EU”[[contid]]

The issue that is likely to arise is in regards to the EU negotiating as a single entity representing all 27 member states – since the UK might hope to negotiate one set of rules with the wealthier western european states (EU15)  and look to establish different terms with the newer (A8) members – which the EU would find it difficult or impossible to allow.  There has also been talk about the introduction of a points-based system (similar to in Australia) which again may have different effects on the various EU states.

Think tank Open Europe predict a “relatively liberal free movement regime” that allows negotiation in areas such as restrictions to welfare, the ability to deny EU migrants long-term residence status, and an emergency brake on immigration.13)Open Europe: What if…? The Consequences, challenges & opportunities facing Britain outside EU[[contid]]

Any negative impact of a Brexit on UK citizens living elsewhere in the EU therefore is most likely to be felt by the those who are claiming benefit or seeking to enter an EU country that is also experiencing ‘high’ levels of immigration.

If we Remain

Remaining in the EU maintains the status quo, and guarantees the rights of UK citizens to live and work elsewhere in the EU.

However, the extent to which UK citizens living elsewhere in the EU will continue to be able to claim benefits will now be subject to the membership reforms negotiated by David Cameron at the European Council.  The measures agreed in the settlement are also available to other member states to apply so British citizens working abroad could also find themselves subject to the similar restrictions that the UK seeks to apply to EU citizens living and working in the UK.

If the UK votes to remain in the EU, the political pressure to apply stronger measures to discourage or restrict immigration from the EU may – or may not – disappear.  This will depend on how ‘successful’ the negotiated reforms are in reducing EU immigration into the UK.  As such, UK citizens in the EU claiming benefits may need to be wary of these and any further reforms that could be pursued in order to discourage the flow of EU workers into Britain.

What is clear is that a vote to remain all but removes the UK’s leverage when it comes to seeking any changes to living and working arrangements in the EU. From that point forward the UK can continue to apply pressure from within the EU, but any changes to the status-quo would require majority approval from all member states.

Summary

  • The opportunity for British citizens to live and work anywhere in the EU is one of the most popular aspects of EU membership.
  • Despite no free movement existing with non-EU countries, they are more popular destinations for British people seeking to live and work outside the UK.  In 2014 more British citizens left to live and work in Australia & New Zealand than they did for the whole of the EU.
  • The opportunity for British people to live and work anywhere in the EU could come under threat when the UK Government at the point the UK applies restrictions to EU citizens looking to work in the UK.
  • Such restrictions target access to benefits, so any corresponding restrictions placed on UK citizens living elsewhere in the EU are likely to also target benefits.
  • Whilst restrictions to “free movement” and access to public services and benefits are likely if the UK leaves the EU, restrictions could also come into force temporarily or permanently if the UK chooses to remain in the EU, as member states look to address immigration and security concerns.
  • In the event of a Brexit, significant pressure to maintain access to the EU single market and protect the rights of UK citizens living across the EU will likely result in a “relatively liberal” version of free movement that allows for some restrictions on benefits and caps on numbers.

References   [ + ]

Laws

As a member of the European Union, the UK is required to delegate law making powers to the EU in order to allow it to pursue its objectives.

The extent to which powers have been delegated to the EU has been criticised.  Critics claim the legislation it introduces – and power it wields – is often against UK interests, the interests of businesses and undermines the principle of parliamentary sovereignty.

This is refuted by supporters who say that EU membership represents “pooled sovereignty” – the delegation of power increases the UK’s influence and encourages international cooperation.

British Sovereignty

Parliamentary sovereignty makes the British Parliament the supreme legal authority in the UK, it alone is capable of creating or ending any law.  As such Parliament isn’t bound by any written law.

Parliament therefore has the responsibility for checking the work of government – examining, debating and approving new laws.  According to Parliament’s own website “Parliamentary sovereignty is the most important part of the UK constitution”.1)UK Parliament: Parliamentary Sovereignty[[contid]]

Delegation of Powers

Despite the fact that the UK’s Parliament is the only institution capable of creating and ending laws, it sometimes chooses to delegate law-making to other bodies and institutions – when it’s considered to be in the interests of the British people.

Examples include: devolving power to bodies like the the Scottish Parliament and Welsh Assembly; delegating powers to the European Court of Human Rights (ECtHR) to uphold the European convention on Human Rights (ECHR) ; establishing the UK Supreme Court …as well as delegating legislative powers to the European Union.2)UK Parliament: Parliamentary Sovereignty in theory[[contid]]

However these voluntary delegations of legislative authority do not undermine the principle of parliamentary sovereignty, “since, in theory at least, Parliament could repeal any of the laws implementing these changes.”3)UK Parliament: Parliamentary Sovereignty Developments[[contid]]

Sovereignty

EU Powers over the UK

In 1972 the UK signed the European Communities Act (ECA), and agreed that when an EU regulation comes into force, it automatically becomes part of our own national law.4)UK Parliament: The EU Bill and Parliamentary Sovereignty[[contid]]

Furthermore, the ECA made EU law “supreme” over national law, which meant:

a) That the UK parliament would be unable to create laws that conflict with (or contradict) European laws.

b) UK law courts would have to “dis-apply legislation which is inconsistent with the EU law”.

c) If there’s a situation where EU law is in doubt, the UK courts have to refer the question to the European Court of Justice (ECJ) .

“. . . when an EU Regulation enters into force, it automatically becomes part of national law, as it does in the other 26 Member States on the same day.”5)UK Parliament: The EU Bill and Parliamentary Sovereignty – European Scrutiny Committee[[contid]]

Some suggest the expansion in scope and breadth of EU responsibilities brought about by updates to the EU treaties “could be seen, in practical terms, as diminishing parliamentary supremacy because they extend the competence of the EU to being able to legislate on a wider area of policy areas.”6)Lawteacher: European Union Weakens Parliamentary Supremacy[[contid]]

Has the EU undermined Parliamentary sovereignty?

The UK Parliament retains the ability to revoke any powers delegated to the EU.  As such, it is fair to say that Parliamentary sovereignty is intact.  However on a practical level, this allows little scope for the UK having the final say on individual laws or specific areas of competence delegated to the EU.  To exercise parliamentary sovereignty the UK would likely be put in an “all or nothing” position, or risk breaking its own commitments in the EU treaties.

An argument frequently made in support of delegated powers is that British sovereignty is increased since pooled sovereignty gives the UK a direct say in the affairs of the whole EU – an entity far larger than just the UK.

EU’s influence in British Law

When the UK signed the ECA , 2,900 regulations and 410 EU directives were added to English law – “a full 43 volumes of legislation”.7)Student Pulse: UK Membership in the European Union: Undermining Parliamentary Sovereignty?[[contid]]

Estimates of how much UK law is influenced by the EU vary wildly, even the House of Commons own analysis concluded that “in numerical terms. . . it is possible to justify any measure between 15% and 50% or thereabouts.”  Full Fact provides an excellent overview here.8)House of Commons: How much legislation comes from Europe? p.7[[contid]]

Legislation

The wide variation in estimates is down to what definition of ‘UK law’ you use.  Such figures are not especially helpful in any case – since “. . . figures don’t give information on how EU laws affect the daily lives of citizens or businesses – the relative material impact. For example, the ‘working time directive’ is arguably of far greater significance to the working population than, for example, the Commission Regulation on the classification of padded waistcoats in the Combined Nomenclature”.9)House of Commons: How much legislation comes from Europe? p.6[[contid]]

Main areas of Impact

The areas in which EU legislation has the most direct impact on British people and British businesses are:

  • Free trade rules of the single market (no quotas or tariffs for trade within the EU)
  • Common Commercial policies (such as the CAP and CFP, to protect EU businesses)
  • Competition law (to stop anti-competitive practices)
  • Free movement (the right to live and work anywhere in the EU)
  • Energy efficiency (ratings)
  • Security and Justice (such as the EAW )
  • Employment law (such as the Working Time Directive)

There are also understandings on public health, the environment, consumer protection, transport, social policy, plus economic, social and territorial cohesion.10)BBC Newsbeat: How does Europe affect people’s lives in the UK?[[contid]]

The EU is particularly active when it comes to creating regulations for businesses to adhere to, and those regulations that are deemed unnecessary and excessive have been referred to as “red tape”.  Open Europe estimated that the “total cost to the UK economy of the top 100 most expensive EU regulations is £27.4 billion a year.”11)Open Europe: Top 100 Costliest EU regulations[[contid]]

Despite what appears like a huge burden for British businesses to bear, there is recognition that regulations are necessary in some form – there are good regulations and bad regulations, and what may be considered bad for business may be positive for the wellbeing of workers and consumers.

  • See also our Red tape section in Money.

Repatriating Powers?

In their manifesto for the 2015 general election, the Conservative party stated its commitment to see “powers flowing away from Brussels, not to it” and that they had “already taken action to return around 100 powers, but we want to go further.”12)Conservative Party: Manifesto[[contid]]

Analysing this claim, Full Fact found that an opt-out negotiated by the previous Labour government had allowed the Coalition to reclaim around 100 powers (specific Legislative acts relating to security and justice).13)Full Fact: Have 100 EU ‘powers’ been returned to the UK?[[contid]]

The extent to which legislative powers and competences can be reclaimed whilst the UK remains a member of the EU – remains to be seen, but what’s certain is that the primary instrument for “picking and choosing” what policies and legislative acts the UK adopts is the “opt-out ”.

The current extent and scope of British opt-outs appears to be quite significant, the UK “is the member state with the most opt-outs”.14)Euractiv: Europe ‘à la carte’: The whats and whys behind UK opt-outs[[contid]]

It has opt-outs from monetary policy (e.g. the euro currency), economic policy (e.g. banking union), the Schengen area (open borders), and Security & Justice. This has lead to some claiming that “the UK has already become a permanent outsider to a significant part of EU policy-making”.15)EU Analytics: The size of the British opt-outs[[contid]]

2016 Membership & EU Reform Negotiations

“Ever-Closer Union”: In his pre-referendum negotiations, David Cameron has secured agreement from the European Council that the UK will have an opt-out from “ever-closer union”.  Ever-closer union is associated with the move towards closer political union between EU members, which is unpopular in the UK.  In securing the UK an exemption, David Cameron hopes to persuade voters that the UK can have the best of both worlds – access to the single market but not obligation to participate in EU law and policy that can be regarded as closer political integration.  As usual, the devil is in the detail and there are questions surrounding the scope of the opt-out, which we discuss in more detail in our Ideology section here.

The “Red Card”: David Cameron has also secured a ‘red card’ mechanism which “enables National Parliaments to block EU laws”. To trigger a red card, a threshold of 55% of the votes allocated to EU member parliaments would need to be reached, and it appears only to apply to areas of law “where legislation might better be done at the national level”.

Analysis suggests that this is only an adaptation of the current yellow card system (used only twice ever), and that it doesn’t automatically block new legislation – it just requires that the Council of the EU takes into account the objections raised.  The Council can still proceed with the legislation if it considers it has made the necessary adjustments to accommodate the concerns raised.

Critics say it would be extremely difficult to secure the necessary votes, and could be equally be used to block laws that the UK does want to see implemented.16)BBC: UK’s draft EU deal: What do red and yellow cards mean?[[contid]]  Analysing its implications to UK and EU law, Marina Wheeler QC found that “it is not enough to use “red cards” to stem the flow of EU legislation.  Reform needs to address the EU legal order. . .”17)UK Human Rights Blog: Cavalier with our Constitution: a Charter too far.[[contid]]

Ultimate Decision-making Power?  It’s also expected that David Cameron will seek to get agreement from the EU that the UK Supreme Court will be able to hold the European Court of Justice (ECJ) to account for adhering to its own (EU) laws.

EU Law

Whilst opt-outs offer member states the opportunity to reclaim or retain powers over certain matters, “there is the potential for them to breed resentment between member states.”  Further, the “European Commission has repeatedly expressed its opposition to so called ‘a la carte ’ membership of the EU, [arguing that] allowing the freedom to pick and choose policies would lead to the negation of the European project.”18)Euractiv: Europe ‘à la carte’: The whats and whys behind UK opt-outs[[contid]]

EU Law

The Democracy Trail

Opt-outs and vetoes go some way in allowing member states to protect their own individual interests – however, “successive EU Treaty amendments have limited the legislative powers of governments by removing the national veto in decision-making, increasing the use of qualified majority voting and expanding the policy areas in which the EU has a role.”19)House of Commons: The European Union: a democratic institution?[[contid]]

As such it’s reasonable to check the democratic legitimacy of the EU and how representative of its people it is.

A frequent criticism of the EU is that it suffers a “Democratic deficit” – “. . . the EU institutions and their decision-making procedures suffer from a lack of democracy and seem inaccessible to the ordinary citizen due to their complexity.”  Furthermore the EU itself recognises that “EU voters do not feel that they have an effective way to reject a ‘government’, they do not like, and to change, in some ways, the course of politics and policy.”20)European Union: Democratic deficit[[contid]]

A disconnect or disaffection with politics at the European level have been expressed in low turnouts at European elections, for which there’s an EU average (1979-2014) of 44% and just 30% for the UK.21)UK Political Info: European Parliament election turnout 1979 – 2014[[contid]]

Democracy

The European elections supply elected members to the European Parliament  (MEPs) which is the only directly elected body of the EU.

The EU, recognising that “democratic legitimacy has been sensitive at each stage of the process of European integration”, has taken measures to increase the powers of the European Parliament – extending the areas over which it has joint decision-making powers with the Council of the European Union.  Legislation can therefore now be adopted into EU law by both the European Parliament and the Council of the European Union.22)European Union: Democratic deficit- co-legislation[[contid]]  However it’s also important to recognise that the unelected European Commission has the sole “right of initiative ” when it comes to proposing laws for adoption; and will choose laws in order to meet its EU treaty obligations, or because another EU institution, country or stakeholder has asked it to act.23)European Commission: The European Commission at Work[[contid]]

The extent to which there is genuinely a “democratic deficit” is the subject of some debate, with some commentators blaming national politicians for not wanting to cede more powers to the European Parliament as it then limits their own.24)Guardian: What’s all this about the EU’s ‘democratic deficit’?[[contid]]

What’s certain is that European level politics doesn’t attract the same level of interest and participation as national or even global political concerns.  Whilst the only directly elected body – the European Parliament – is relatively weak compared to the Council of Ministers and the European Commission, the claims of a democratic deficit will continue.25)House of Commons: The European Union: a democratic institution – deficit[[contid]]

Democracy

If we Leave

Those supporting the UK leaving the EU claim it would “give Britain back control of its own laws, which would ensure that our national parliament remains a genuine, legitimate and democratic force.”26)Leave.eu: On Democracy and Law[[contid]]  Furthermore, only by leaving the EU would the UK be free to stop the flow of regulations that harm business and which are automatically adopted into UK law without the approval of parliament.  Eurosceptics also point to the fact that the UK is “one of the world’s oldest democracies, with a robust and mature legal system” so is more than capable of having complete control over laws implemented in the UK.

Those in support of Britain’s membership claim that withdrawing from the EU to regain sovereignty and control over legislation is unnecessary and counter-productive.  They argue that since the UK voluntarily delegates law-making responsibilities to the EU – its parliamentary sovereignty remains intact so there’s no advantage to be gained by leaving.  They also state that the act of leaving the EU doesn’t necessarily mean the UK can abolish EU legislation – a great deal would need to remain in order for the UK to continue to trade with the EU, regardless of what trade terms are agreed.

Furthermore, supporters say that were the UK to leave, British workers and consumers could suffer if EU legislation designed to protect their safety and rights is repealed.

If we Remain

Supporters of Britain’s EU membership argue that only by staying within the EU can the UK play an active role in creating and amending EU legislation.  Whilst they acknowledge the large volumes of legislation they point out that much of it is necessary to protect workers, consumers and to participate in the EU single market.  Where there is “red tape” they indicate that actions are being taken in order to reduce this – both within the EU and at the national level.

With regards to the authority EU courts have over those of the UK, supporters say that UK parliamentary sovereignty is maintained and supra-national laws and courts are the best way to ensure a consistent approach over things such as workers rights, resources and the environment.  They also assert that by remaining in the UK’s sovereignty is actually greater as it has powers “to get things done” in the larger body that is the EU.27)Spectator: Cameron fights back[[contid]]

Eurosceptics point to the fact that the EU is expanding its breadth, scope and influence – gradually removing opportunities for member states to “pick and choose” EU policy and legislation.  They point to the fact that despite the UK “voting against 576 EU proposals (2009-14) 485 still passed and became law”.28)Business for Britain: British MEPs fail to block EU legislation 84% of the time[[contid]]  And that red tape is a huge and unnecessary cost to British business and the economy, that once created can be extremely difficult to reverse.

Eurosceptics believe that parliamentary sovereignty is undermined by the EU in a practical sense, because in order to extract itself from specific EU legislation the UK would need to deploy a “nuclear” option of withdrawing from all, or from the EU entirely.

Summary

  • As a member of the EU, the UK has delegated powers which include the ability to introduce new laws and legislation.
  • The UK is required to overrule any national UK law that is in conflict or contradiction with an EU law.
  • In theory the UK parliament retains its parliamentary sovereignty as delegation of powers to the EU is voluntary and can be repealed, although by no means is this straight forward.
  • The EU’s influence is mostly felt on matters such as the free market, common commercial policies, competition, free movement, energy, security and justice, employment, health and the environment.
  • Opt-outs and vetoes allow national Governments some scope to pick and choose EU policy and laws, however there is a political ‘cost’ to exercising these options.
  • It’s broadly acknowledged that the EU has a “democratic deficit”. However national parliaments and EU citizens are also partly to blame.
  • Legislation created by the EU is designed to achieve common objectives shared by all member states, not to address the needs of any one individual state.

References   [ + ]

Ideology

The European Union believes that by creating an “ever-closer union” among the people of Europe, it can deliver peace, prosperity, security and social justice.

The idea of ever-closer union is a contentious issue in Britain because it is associated with the European Union’s drive towards increased political union – deeper integration and the increasing centralisation of decision-making powers in Brussels.

Public support for further political union is low in Britain, so if voters believe the future of EU membership necessitates deeper political integration and an ever-closer union, then it’s reasonable to suspect that they are more likely to vote to leave the EU.

Recognising this, in Februrary 2016, David Cameron secured agreement from the European Council that the UK “is not committed to further political integration into the European Union”, and that “references to ever close union do not apply to the UK”.1)European Council: Draft Settlement for the United Kingdom
within the European Union
[[contid]]

How Britain views its EU relationship

“. . . people in Britain rightly think that the EU interferes too much, that too many decisions are taken too far away from them, and that they absolutely are clear about one thing . . . They and I do not want to be part of an ever-closer union to be dragged into a state called Europe. That may be for others, but it will never be for Britain, and it is time to recognise that specifically.”

David Cameron speaking at the European Council, 26 June 20152)UK Government: European Council June 2015: David Cameron’s speech[[contid]]

EU Reform

When offering a choice of five policy options, Natcen Social Research found that “no less than 43% say that, while the country’s policy should be to remain in the EU, it should also be to try and reduce the EU’s powers”.3)NatCen: Britain and Europe[[contid]]

Public Opinion

Summarising, the study states that:

“All in all, almost two-thirds of voters (65%) would like Britain’s relationship with the EU to be a looser one than it has been up to now and thus, defined in this way, Euroscepticism is relatively common in Britain.”

NatCen Social Research: British Social Attitudes | Britain and Europe 20154)NatCen: How deeply does Britain’s Euroscepticism run?[[contid]]

At an ideological level therefore there is strong evidence to suggest British citizens are uncomfortable with the concept of “ever-closer union”, and actually want to see EU powers reduced.

David Cameron realises that if he can convince the British public that ongoing EU membership genuinely does not require a commitment to ever-closer union and for more powers to shift to Brussels – then the ‘Remain’ campaign stands to secure the substantial support of those who want to “stay in the EU but reduce its powers” (43% of people, 2015).

Public Opinion


Therefore, David Cameron may be able to boost support for remaining in the EU from 32% to anything up to 70%, with an opt-out from ever-closer union.

How important is “ever-closer union” for the EU?

The commitment to “ever closer union among the peoples of Europe” is a founding principle of the EU.  It first appeared in the opening sentence of the 1957 Treaty of Rome which established the European Economic Community (EEC) – the predecessor of the European Union.5)EU Archives: Treaty of Rome 1957[[contid]]  In the most recent Treaty on European Union the commitment is reiterated appearing within Article 1 of the Treaty and reads:

“This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen.”

Treaty on European Union, Article 1

Ideology

It’s clear that the commitment is intended to be central to the European Union’s mission, and its position within the treaty reflects its relative importance amongst its objectives.

If we look at the activities of the EU in recent times, the process of creating an “ever-closer union” is an accurate description of what has come to pass: “[the European Union] has expanded its role in recent decades to play a significant part in areas of policy that had traditionally been the reserve of nation states.”6)Civitas: Overview of the European Union[[contid]]

Despite this, Britain has secured various opt-outs from EU legislation and major integration initiatives such as the Economic & Monetary Union (EMU) and the Schengen Agreement – which reasonably challenge the notion that “ever-closer union” is a fundamental requirement for EU membership, as Martin Schulz, the President of the European Parliament explains:

“[Ever-closer union] is not a threat for a country that is the UK. The ever closer union is not compulsory as Britain has shown in the past.”

Martin Schulz, the President of the European Parliament

This perspective was supported by the European Council itself which said:

“the concept of ever closer union allows for different paths of integration for different countries, allowing those that want to deepen integration to move ahead, while respecting the wish of those who do not want to deepen any further.”

European Council, June 20147)European Council: Brussels, 27 June 2014[[contid]]


EU Integration

Does the opt-out change anything?

Whilst the importance of “ever-closer union” is the subject of some debate, does securing an opt-out for the UK actually change anything moving forward?

In Full Fact’s analysis it found that a British opt-out couldn’t be interpreted as an all-encompassing opt-out from future EU legislation, but it may hold some sway in how laws are interpreted in the European courts.  Full Fact concluded that:

What we can be quite sure of is that removing it isn’t going to give rise to immediate, concrete change in how the EU or the UK work.”

Full Fact8)Full Fact: Renegotiating “ever closer union” Analysis[[contid]]

EU Integration

Even EU supporters draw similar conclusions, suggesting that David Cameron “. . . could claim victory in securing the removal of a piece of unwanted symbolism, but nothing of any substance would change.”9)LSE BrexitVote: Understanding Cameron’s renegotiations: the ‘ever-closer union’ problem[[contid]]

Critics highlight that it remains unclear which EU policies and judgments the opt-out would actually exclude the UK from – and question whether it could be applied retrospectively.10)They Work for You: Liam Fox House of Commons, 5th Jan 2016[[contid]]  Supporters counter that whilst the opt-out may be symbolic, it also means the european courts “cannot use ever-closer union to provide a ratchet against Britain in future court judgments.”11)They Work for You: David Cameron House of Commons, 5th Jan 2016[[contid]]

However, securing an opt-out from ever closer union might only need to be as symbolic as the words themselves.  If David Cameron can convince a sufficient number of voters that Britain has an exemption from deeper political integration in the EU, then whether it does in practice or not – is neither here nor there.

To instigate substantive change to the EU mission, it is reasonable to expect that there would need to be pressure from the majority of the EU’s member states for reform.

What does the rest of the EU want?

Well, the EU’s own research finds that there is overall and growing support for strengthening the EU among its 28 member states.12)European Commission: Eurobarometer Public Opinion[[contid]]

EU Integration

The European Commission’s findings are largely supported by other sources; whilst not quite as conclusive, the market researcher Opinium found in a seven nation survey that the most popular choice of options (35% of respondents) supported “ever closer union with increased cooperation and transfer of powers to the European level”, with 10% in favour of maintaining current levels of integration, and 28% supporting the repatriation of powers.13)Opinium: European Union Interviews[[contid]]

Furthermore, looking again at the EU’s own research, it finds that in addition to having majority support for strengthening the powers of the EU it also has increasing support for specific measures that clearly represent closer union – such as support for an EU army:

“A clear majority of Europeans are now in favour of the creation of a European Union army (55%, +9 percentage points since January 2014), while 37% (-10) are opposed and 8% (+1) gave no opinion.”

European Commission, Eurobarometer14)European Commission: Standard Eurobarometer 83 Spring 2015, p.183[[contid]]

Taking into account this research, it appears that in purely democratic terms the instruction from the EU’s member states is to stick to the plan – continue towards ever closer union.

If we Leave

If the UK votes to leave the EU, then obviously its commitments to the European Union, its ideals and its vision end too.

What’s interesting is that the UK leaving is most likely to strengthen the EU’s ideological resolve for ever-closer union and to push for deeper integration.  Removing the UK from the Opinium data, support for “ever closer union” from the other countries surveyed increases to 38%, and the preference for the repatriation of powers falls to 26%.

Through its national veto and opt-outs, the UK has more frequently than most been a dissenting voice and an obstacle to further integration. Without the UK, the EU is likely to meet less resistance to measures which represent deeper integration.

If we Remain

With the UK’s opt-out from ever-closer union agreed by the all 28 members of the European Council , it is reasonable to expect it to be formally written into EU law, and included in the next EU treaty.

The burning question though is what effect it will have.  The legal scope of the opt-out is far from clear, and with different paths of integration already being allowed for by the EU – does it actually change anything? Is it an all-encompassing opt-out of future and historic political integration, or simply a symbolic gesture that has minimal legal effect?

The general consensus is that there is unlikely to be any substantive change to the strategic direction of European Union, not least because there is far greater support for the EU’s drive towards centralisation of power from its other 27 member states.

In the event of a British vote to remain in and against a backdrop of increasing support for the union from across the member states, the EU would have a renewed mandate to continue the mission for closer integration and ever-closer union – even if it does make allowances for “those who do not want to deepen any further”.  This is why there is concern amongst those who oppose the Union that a referendum vote to stay in will act as a British thumbs up for the entire European Union project.

Should the EU allow “different paths of integration for different countries”, the policy divide that currently exists between more highly integrated eurozone and non-eurozone members seems likely to widen.

By pursuing an ideology of “in Europe but not run by Europe”, Britain may find itself increasingly excluded from decision-making processes – as it found in 2011 when EU members responded to Britain’s veto by forming an accord instead.15)BBC: Euro crisis: Eurozone deal reached without UK[[contid]]

As former German Chancellor, Gerhard Schroder stated in 2013: “Those who are willing to have more integration should not be bound by those who are not.”16)Telegraph: Britain is the major problem for the EU, says Gerhard Schröder[[contid]]

Summary

  • There is little support currently in Britain for “ever-closer union” and increasing the powers of the European Union.
  • In his membership reform negotiations, David Cameron has secured agreement from the EU Council that the UK will have an opt-out from ever-closer union.
  • Ever-closer union is acknowledged to be largely symbolic, and according to the EU still allows different paths of integration for different countries.
  • Significant questions remain regarding the scope, practical and legal implications of the UK’s opt-out from ever-closer union.
  • Regardless of a British opt-out, the EU is likely to continue towards closer integration and ever-closer union, with more positive support from other EU members.
  • If the UK leaves the EU a major obstacle to EU policies that represent ever-closer union would have been removed.
  • If the UK remains in the EU, the opt-out may or may not translate into a genuine ability to pick and choose what EU policies it follows. Choosing to use the opt-out would seem likely to result in the UK being increasingly peripheral in significant policy areas – which may be considered a good or bad thing.

References   [ + ]

Alternatives

Campaigners on both sides of the debate present opposing views of what Britain will look like in the event of a British exit from the EU.

Those backing continued membership suggest that Britain lacks credible alternatives to the EU, and without it the UK will be a weaker nation, economically compromised, less secure, and stripped of influence and relevance.1)Open Europe: From a Reluctant European: A memo to the Prime Minister[[contid]]  Those supporting Brexit suggest Britain can have the best of both worlds by maintaining an economic relationship with the EU, reclaiming sovereignty, and exploring new opportunities on the world stage.

In this section we look at six alternative ‘models’ that the UK could pursue. The primary objective in each is trade; since it represents the single biggest “opportunity” and “threat” of a British EU exit.  A significant fall in trade will have major economic (and subsequently political) consequences, so protecting and potentially increasing levels of trade is of utmost importance.

“No matter whose Brexit blueprint you look at, there’s one common ingredient: trade.”

Daily Telegraph2)Telegraph: Would Britain thrive outside the EU?[[contid]]

See also our Jobs & Trade section.

When looking at the alternatives one of the key things to consider is whether that model is in use by another nation and how well it is working.  However comparing that country with the UK – or expecting the UK to replicate its success – is largely counter-productive. This is because the UK and its economy is unique in size and composition.

In terms of precedent, no country has ever left the European Union since its formation in 1993, however Greenland did leave the EU’s predecessor – the EEC – in 1985.3)Wikipedia: Withdrawal from the European Union[[contid]]  What’s more common are European countries choosing not to join the EU, but to pursue a relationship that promotes “close ties and cooperation” with the EU.

Please note: The ‘pros’ and ‘cons’ in this section are written in the context of the UK voting by majority to leave the EU, whereby popular support is with policies that maintain trading relations with the EU, but promote political and strategic separation.

Option 1: Join the European Economic Area (EEA)

As a member of the EEA , the UK could continue to have full access to the EU’s single market.

Members of the EEA are, however, obliged to adopt all EU laws and regulations relating to the single market, except those for agriculture and fisheries.  EEA members are still required to make significant contributions to the EU administrative budget, and participate in the free movement of labour, capital, goods and services.

Pros

  • Predominantly an economic relationship with the EU.
  • Full access to the EU/EEA single market.
  • Can choose to reject a particular piece of EU legislation (a “right of reservation”).
  • Freedom to negotiate free trade agreements with rest of world.
  • Reduced contributions to the EU budget (estimated savings of around £1bn / year).4)Civitas: The Norwegian Way[[contid]]
  • Opportunity to observe and ‘influence’ creation of EU single market legislation.5)Civitas: The Norwegian Way, p.5[[contid]]
  • Input into global standards and trade via the WTO .
  • Can suspend free movement temporarily in emergency social or economic situations.6)European Commission: Agreement on EEA, Article 43[[contid]]
  • An emergency “last resort” veto on specific EU legislation.7)Civitas: The Norwegian Way, p.30[[contid]]

Cons

  • No vote or formal input on the creation of EU legislation.
  • Expected adoption of EU laws and regulations for the single market (except fisheries & agriculture).
  • Continued financial contribution towards EEA running costs and the socio-economic development of some EU states.
  • Required to accept free movement with no ability to apply permanent restrictions or controls to immigration from the EU.
  • Opting-out of or rejecting EU legislation can lead to the EU suspending any associated rights to benefits linked to that legislation.

Example: Norway

Summary:  Membership of the EEA represents an interesting half-membership option, but whilst it protects trading arrangements with the EU, it would require the UK to continue with many of the less popular aspects of its legislation – as well as the free movement of people.  The lack of direct decision-making power and participation in policy creation can also be seen as a “democratic deficit”.  As such, David Cameron has discounted the “Norway option”, and the Leave campaign have also said they “do not support” the Norway option.8)Guardian: Cameron tells anti-EU campaigners: ‘Norway option’ won’t work for Britain[[contid]]

Nonetheless EEA membership could be a “jumping off” option that allows for further adaptation at a later date.9)Civitas: The Norwegian Way, p.7[[contid]]

Option 2: EFTA

As a member of the European Free Trade Asspciation (EFTA) , the UK could participate in free trade with its other members including – Norway, Iceland, Liechtenstein and Switzerland – and make use of free trade agreements with 32 other countries.10)House of Commons Library: Norway’s relationship with the EU[[contid]]

The UK would be free to agree a set of bilateral accords with the EU which would govern the UK’s access to the single market in specific sectors.

Pros

  • Predominantly an economic relationship with the EU.
  • No obligation to take on new EU legislation or free movement of people.
  • Free trade in goods with the EU, subject to complying with relevant regulations.
  • Informal influence in EU policy-making via working groups and committees.
  • ‘Lower’ contributions to the EU budget.
  • Ability to negotiate free trade agreements with rest of world and set own tariffs.
  • Influence in global standards and trade via WTO.11)ForBritain / Global Vision: Switzerland and the European Union[[contid]]

Cons

  • No direct vote or formal say on the creation of EU legislation or setting EU policy.
  • No customs union by default so additional administrative cost to business.
  • Free trade in services with the EU would need to be negotiated.
  • Sector-specific bilateral agreements expected to be complicated and slow.
  • Complex negotiations and “pick and mix” approach likely to be resisted by the EU.

Example: Switzerland

Summary:  Membership of EFTA would provide the UK with a free trade area and existing FTAs, as well as a starting point from which it could negotiate bilateral sector-specific trade deals with the EU.  This option would win support from those who wish to see the UK free from political integration with the EU.  The UK would no longer be committed to the free movement of labour, and to would be free to reach FTAs with non-EU countries.  A successful relationship would rely heavily on the EU’s willingness to negotiate and is likely to be fraught with political difficulty – as it seeks to ensure that the UK cannot enjoy the benefits of the EU without shouldering a fair measure of the costs.

Option 3: NAFTA & Commonwealth

NAFTA is a rules-based trade bloc that consists of the USA, Mexico and Canada.  With the US being the UK’s single largest trading partner, participation in NAFTA could see levels of transatlantic trade increase further.  The UK also has unique political relations with the 52 other countries of the Commonwealth – countries like India, Australia, New Zealand, South Africa, the Caribbean, the Pacific Islands – which could open up new opportunities with many fast growth economies.

Pros

  • Potential for greater trade with the US.
  • Unique position to negotiate increased trade with Commonwealth countries.
  • NAFTA would offer a facility for resolution of trade disputes.
  • Less reliance on EU trade and EU/UK cooperation.

Cons

  • NAFTA may not accept the UK for political and practical reasons.
  • Commonwealth countries typically have more protective trading arrangements.
  • Commonwealth countries lack of infrastructure could hinder trade.12)TheCommonwealth.org: Unleashing the trade
    potential: priorities for the Commonwealth[[contid]]
  • UK is geographically distant.


Summary:  Proposing NAFTA and free trade with the Commonwealth as a direct alternative to trading with the EU at current levels is problematic due to its uncertainties.  Increasing trade with NAFTA and Commonwealth countries may be desirable but would need to be pursued as part of a broader free trade policy – from either within the scope of the EU, or outside of the EU.

Option 4: Customs Union

A ‘Customs Union ‘ with the EU would allow the UK to trade goods freely, avoiding internal tariff barriers.  This is the arrangement that prospective EU member, Turkey, has.  It would require the UK to adopt many EU single market regulations, and would require the UK to apply the EU tariffs on imports from outside the EU.

Pros

  • No obligation to contribute to the EU budget.
  • No obligation to apply EU laws (except those directly associated to trade in goods).
  • No obligation to abide by freedom of movement laws.

Cons

  • EU regulatory standards must be incorporated into domestic law.
  • No influence over the creation of such laws.
  • No access to single market for trade in services.


Summary:  This arrangement with the EU is unique to Turkey and exists in part due to its geopolitical situation and the ongoing process of accession to the EU.  It’s unlikely to be available to the UK and nor would it prove as beneficial when much of the UK’s trade is in services.  Equally it’s the EU’s customs union that legally prevents the negotiation of FTAs with other non-EU countries.13)House of Commons: The role and future of the Commonwealth[[contid]]

Option 5 : UK bespoke deal

Under this model, Britain would leave the EU and set out to establish trade deals on a country-by-country basis. As a matter of top priority the UK would look to sign a free trade agreement with the EU.  Whilst such a negotiation is likely to be politically difficult, it’s broadly recognised that both sides have the economic incentive to conclude a deal, even if the terms under which it could be reached are uncertain. Under Article 50 of the Treaty on European Union the UK has up to two years to negotiate a the terms of a withdrawal, but there is no legal obligation for the remaining EU to sign a free trade agreement with the UK.14)EU Law Analysis: Article 50 TEU: The uses and abuses of the process of withdrawing from the EU[[contid]]

Pros

  • Protects national sovereignty.
  • Removes costs of full EU membership.
  • High probability of retaining access to EU single market.
  • Freedom to negotiate UK’s own FTAs.
  • A “single market lite” model could give the UK some say over EU rules and regulations.15)Open Europe: What if…? The consequences, challenges and opportunities facing Britain outside the EU[[contid]]

Cons

  • Where more countries are joining large trading blocs, this option could leave the UK more exposed.
  • Likely to require agreement on common standards and adoption of regulation in exchange for EU market access.
  • Likely to mean the UK operates outside of the EU customs union (CU) , effectively creating a new trade border between the EU and UK.
  • Potentially a prolonged period of uncertainty whilst FTA negotiations take place.
  • EU likely to leverage its size in any negotiation, and unlikely to offer the UK a deal that could be perceived as advantageous by EU members.

Summary:  This option could take many forms as the balance is struck between ensuring access to the EU single market and not getting drawn back into the regulations and costs associated with membership. Equally the EU would not want to be seen to be offering ‘too good a deal’ to the UK.  The UK would have the freedom to negotiate free trade deals elsewhere, and represent itself on the world stage.

Could the UK sign its own Free Trade Agreements?

Non-EU countries Switzerland and Norway have both negotiated more Free Trade Agreements (FTAs) with the world’s “G20” largest economies – than the European Union has.  While larger trading blocs wield greater negotiating power, progress can be slow due to “diplomatic and economic tribulations”16)LSE EUROPP Blog: What the EU could learn from Switzerland’s free trade agreement with China[[contid]] and the number of stakeholders who need to reach agreement.

Alternatives

Summary
A range of potential alternative models exist for a UK outside of the EU.  However, whilst it’s useful to see that how they work and what countries are using them, they can’t be viewed as a like-for-like illustration of what model the UK would or could adopt.The UK is fairly unique in Europe – it would be by far the largest European country to operate outside of the EU, it has numerous strengths but also weaknesses.  Ultimately it would be up to the UK to forge a new path that works.Where ongoing relations with the EU are concerned, it could be said that:

  • Other European countries trade extensively with countries of the EU, without being members of the EU.
  • Given the importance of the UK market to the eurozone – and vice versa – there is sufficient incentive for both parties to agree to an FTA.
  • The ‘deeper’ the trade agreement, the more rules and regulations the UK would need to adopt or comply with.
  • The ‘deeper’ the trade agreement, the higher the UK’s contribution to the EU will be.
  • Non-EU members have no formal vote or say in regulation – “regulation without representation” – but could still exert influence in other ways.
  • The more the UK seeks to “pick and choose” what it wants – the more resistant the EU will be.
  • In any negotiation the EU will not want to be seen to be giving the UK too good a deal.

Where relations with the rest of the world are concerned, what we can determine is that:

  • The UK would not inherit the EU’s FTAs , so would need to establish new ones itself.
  • Nations of all sizes can establish FTAs with the world’s largest economies where the political will exists.
  • The UK already has significant trade volumes with the rest of the world so has a foundation to build on.
  • The UK would have potential opportunities with english-speaking and Commonwealth countries.
  • If the UK pursued a completely open and liberal “multilateral” approach to free trade, then its negotiating position would be weaker than if it was more selective through “bilateral” agreements.
  • Whilst not large, the UK is also not small – currently the world’s 5th largest economy and possessing significant “hard” and “soft” powers.

References   [ + ]

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