With all the talk around the UK referendum on EU membership, what is the current state of play?

By George Summers

As we inch closer to 2016 and the last full year before the UK's referendum on its European Union status, the debate about a possible "Brexit" situation is ongoing.

For those unfamiliar with the term, the Brexit refers to the idea that the UK would abandon the EU and split off entirely. They would maintain trade and defense agreements, but they would no longer have the specific arrangements of EU membership. This is a controversial concept, of course, but where it once felt unrealistic and almost silly it now appears to be a very real possibility. Significant factions within Parliament are seeking to explore the idea in detail.

We're still in the midst of a prolonged period of debate, discussion and analysis. The referendum on EU membership is merely scheduled to take place before the end of 2017, so we don't yet know exactly when a decision will be made. We do know, however, that with each passing day, the idea of the Brexit moves closer to the forefront of UK consciousness and that of Europe at large.

EU Flag

Here are a few words on where the discussion stands in the final month of 2015.

The basic debate is divided between two sides: Eurosceptic UK citizens who believe the nation could better protect its interests and form trade agreements independent of the EU's regulations; and others who believe the UK remains in a stronger negotiating position internationally if it's part of a larger entity. Border control, national security, business regulation and economic distribution, and international trade agreements are the core issues over which these two sides disagree about the impact of EU membership. And because the Brexit is essentially an unprecedented concept, there isn't a consensus as to which side has the more reasonable argument.

There appears to be some growing momentum against the idea of a Brexit, at least in terms of the loudest opinions being heard. Just this past week, ratings agency Moody's declared that a Brexit would hurt the UK's economy by way of damaging trade and international investment deals. Moody's also made a few specific points to counter some of the popular pro-Brexit arguments. For instance, their analysis estimated that economic savings generated by not contributing to the EU's budget—something pro-Brexit people have argued harms the UK's economy—would amount to only about 0.6 percent of annual economic output. Moody's also pointed to the trade relationships between Germany and China as a counterpoint to those who argue it's too difficult for the UK to form trade agreements with countries outside of the EU.

David Cameron by UK Home Office (CC-BY-2.0)

By UK Home Office (CC-BY-2.0)

This analysis could actually have a strong impact on the state of the debate. That's because in the opinion of one policy analyst close to the situation, there are fairly even numbers of proponents and opponents of EU membership in Parliament, but the number of undecided MPs easily outnumbers both of these groups. That implies that a lot of members of Parliament have yet to make up their minds about the debate. And with the more analyses like Moody's that come about, the likelier it is that undecided MPs begin to lean toward the conservative route of staying within the EU. This speaks to Prime Minister David Cameron's approach to the situation, which is to attempt to restructure the UK's membership with the EU, rather than sever it. It's an idea that could placate dissatisfied opponents of EU membership to some extent, without risking negative developments like those Moody's warned of.

To add even more pressure against an EU exit, it's become clear that the United States—the UK's most powerful ally—is firmly on the side of ongoing membership. It was recently suggested by a U.S. trade representative that the U.S. wasn't that interested in a separate free trade agreement with a UK that might vote to leave the EU. That's quite an alarming suggestion for the UK given its 200-year relationship with what has become its most valuable (and most heavily invested in) overseas partner. This, too, could conceivably sway undecided MPs toward the conservative approach.

There remain many loud voices in favor of a separation between the UK and EU. The referendum is expected by many to be held some time in 2016, and it's going to be a tense time right up until the final decision is made. As of now, there appears to be some slight momentum toward an avoidance of the Brexit scenario.

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