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Brexit retreats

12 March 2014 By Hugo Dixon

The risks of a Brexit have just shrunk a lot. Ed Miliband, the UK’s leader of the opposition, has virtually ruled out a referendum on Britain’s European Union membership if he becomes prime minister in 2015. David Cameron’s Conservatives will need to win an overall majority in the next general election and then lose an In/Out vote to allow the UK to quit before 2020.

This is good news for business: a plebiscite, coming after a populist campaign, might easily produce the “wrong” result. An Out vote would put Britain at risk of losing full access to the EU’s single market, with which it conducts almost half its trade. It would also unleash a long period of uncertainty. Whoever is prime minister then will have to resign, likely to be replaced by a staunch eurosceptic who will then engage in acrimonious divorce talks with the rest of the EU. In the meantime, business would sit on its hands, and the economy suffer.

Meanwhile, Miliband’s priorities for reforming the EU – boosting competitiveness, tackling youth unemployment, completing the single market and decentralising power – are broadly pro-business.

Labour’s move is also good for democracy. Holding referendums is only democratic when a big constitutional change is under discussion or when the people demand one. These conditions are currently not met on the topic of Britain’s EU membership.

While it is true that most of the electorate says it would like a referendum, Britain’s EU membership is low on their list of priorities. Meanwhile, there are no plans for a major treaty change that would alter Britain’s relationship with Brussels.

Miliband is, therefore, right to describe Cameron’s pledge of a 2017 date for a referendum as “arbitrary.”  It was dreamed up last year in the hope of silencing his own eurosceptic backbenchers and stemming the drift of votes to the UK Independence Party (UKIP), which wants to quit the EU – a ploy that hasn’t worked.

Instead, Miliband is promising a referendum on Britain’s EU membership only if there is a transfer of power from London to Brussels. But he also argued, correctly, that this is unlikely during the next parliament, whose term will run from 2015 to 2020. There isn’t huge appetite across the Channel for treaty changes that will further centralise power.

By contrast, a plebiscite on Cameron’s timetable could be a mockery of democracy, as little or nothing has changed in the UK’s relationship with the EU. The shape of the euro zone might also still be up in the air. So the voters could end up taking a momentous decision in a vacuum.

Miliband’s decision to virtually rule out a referendum before 2020 also makes sense from his own partisan perspective. Had he matched Cameron’s promise, the voters might have voted Out in 2017. Miliband might have ended up as a two-year prime minister whose entire term in office was taken up with European squabbles.

The Tories will, of course, hope to win votes from Labour by arguing that it is denying the voters a choice. But such a strategy could backfire if the electorate thinks the Conservatives are obsessed with an issue that isn’t their priority. What’s more, those voters who are really keen on quitting the EU may well vote for the real thing, UKIP, rather than its imitation.

Meanwhile, Labour is now aligned on the question of an In/Out vote with the Liberal Democrats, Cameron’s coalition partners. For Cameron to push through his referendum plans, he will have to win an overall majority at the next election.

At the moment, Labour has a slim lead in the opinion polls. The gap might close as next year’s election approaches, since the UK economy is recovering. But even if the Tories gain the most votes, they may not win the most seats given that the electoral system favours Labour. And even if they win the most seats, it would be surprising if they won an overall majority.

Brexit isn’t totally off the table. Quite apart from the possibility of a clean win for Cameron in 2015 followed by the loss of a referendum, two other scenarios would see Britain quit the EU.

First, if Scotland votes to leave the UK in its referendum in September, it would lose its MPs in a couple of years’ time. Given that Labour has 41 MPs north of the border while the Tories have only one, a Scottish Out vote would have knock-on effects in Westminster: even if Miliband won the 2015 election, he might be kicked out of office soon after.

In such a scenario, an incoming Tory prime minister might well be more eurosceptic than Cameron and might press ahead with an In/Out referendum on the EU. There would be a double blow because the Scots, who tend to be pro-EU, wouldn’t take part in that vote.

Second, even if there is no In/Out EU referendum before 2020, the issue won’t go away. When and if the Conservatives get back into power, they will probably put it back on the table. That said, for the time being, the risks of Brexit have fallen.


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