During his keynote speech in January, David Cameron suggested that if the Conservatives were to remain in power after the next general election, he would offer the British public an ‘in or out’ referendum on our involvement with the European Union by 2017.
In a speech that gained mix reviews all round, the Tory leader said he would renegotiate the UK’s position within the EU, with the aim of reducing Brussels power in this country.
However, if current opinion polls and recent bi-election results are to be taken into account then the chances of the Conservatives remaining in power past next year look as slim as Britain adopting the Euro as its currency.
But regardless of future election results, the issue of Europe will remain. Cameron, Miliband, Clegg or even Farage will face one of the toughest decisions since Blair took us to war in Iraq: Should Britain cut its ties with the EU, a union that gives our country a certain financial stability and accounts for over half of our export income? Or should this tiny isle go it alone?
The Financial Argument
As with most debates, it comes down to the financial aspects that will ultimately determine whether the UK will remain in Brussels pocket, and as with most of the arguments for and against staying in the EU, there are varying pros and cons.
Britain, despite its double-dip-recession, enjoys the 6th largest economy in the world (in terms of its nominal GDP), with London in particular sitting in partnership with New York as the powerhouse cities of global economics.
And exporting goods across Europe brings in £159 billion to Cameron’s ailing budget, accounting for 53% of Britain’s overall GDP.
In total, 45% of what the UK earns comes directly from Europe, be it from the selling of goods, services or investment income.
Also, the freedom to work in other EU member states is a strong pull for a number of leading UK businesses, and a strong argument for staying in the single market.
However, there are a number of case studies that would suggest leaving the EU can massively revitalise a struggling and downtrodden economy.
Whilst in the EU, Greenland was suffering from Brussels red tape as the Common Fisheries Policy decimated the countries income; an income that is 82% reliant on the fishing industry.
But since leaving the EU in 1985 (the only country to ever do so) the people of Greenland have left their near poverty status and now benefit from an average income higher than those living in Britain, Germany and France.
Many expert economists believe the myth that Britain would collapse without the EU as her backbone is ‘complete nonsense’.
For example, one of the reasons that the Swiss have become the success story of the EU rebellion is that they can negotiate their own export tariffs between countries, which are considerably smaller than the 6% imposed by Brussels. This would help drive down the price of the UK leaving the EU even further.
As an independent nation the UK would be able to negotiate special trading deals with countries inside the Commonwealth at better rates that would vastly improve profitability, and the fact that any imports from outside the EU into Britain would avoid any external tariff altogether suggest that on a global scale Britain could once more start to rebuild its international economic partnerships.
Even thought trade with the EU accounts for nearly half of the UK’s earnings, a staggering surplus of some £16 billion has developed with Europe, with Germany set to lose £3billion alone if Britain jumped ship.
An influx of almost 1 million foreign EU workers has also put a massive strain on UK jobs, housing and social care – a point which many would be voters against staying within the EU would cite as their primary concern for future involvement with Brussels.
The EU Family – Getting out of bed with Brussels
Many foreign leaders and business supremos have shot stern warnings in Mr Cameron’s direction ever since he made his keynote speech in Davos, and few fall short in suggesting their relationship with a former EU brother would suffer as a consequence.
French foreign minister Laurent Fabius said his country would ‘roll out the red carpet’ for businesses who would be less keen on trading with the UK in the event of an exit.
Mr El-Erian, who heads the world’s biggest investor in bonds, said the UK would ‘certainly suffer the consequences’ if it exited the EU, including lower growth and lower investment.
But he said the uncertainty generated by the possibility of an EU exit years in the future would also be damaging.
“People like us start putting in an uncertainty premium,” he said.
“If we’re going to make investment decisions, the uncertainty premium associated with that goes up when you’re not sure what the relationship between Britain and Europe will be.”
The EU has also defended its position by pointing out that the result of the single market has been a rise in quality, and a reduction in prices.
It claims that the cost of a mobile phone call has fallen by 70% since the single market came into operation, and the cost of a plane ticket has fallen by 40%.
One of the issues the government will examine is that of working hours. One of the EU directives that has been adopted into British law states that employees cannot work longer than 48 hours a week.
If the UK was to tear up this piece of European legislation, it would allow British businesses to decide their own working hours, albeit somewhat controversial.
“The working hours of British doctors should not be set in Brussels,” said Mr Cameron.