Opinion

Hugo Dixon

EU would also be harmed by Brexit

By Hugo Dixon
June 30, 2014

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

It is not just Britain which would be damaged if it quit the European Union. So would other members. Jean-Claude Juncker’s nomination as Commission president at last Friday’s summit increases the chance of Brexit – Britain’s exit from the EU. Leaders from all countries now need to work to limit the risk it happens.

David Cameron went out on a limb to block Juncker, and failed. The UK prime minister mishandled the diplomacy, notably by seemingly threatening to pull out of the EU if the former Luxembourg premier got the job.

The chances of Britain quitting the EU in the next five years are probably about 20 percent – assuming a 50 percent chance of the Tories winning next year’s general election and a 40 percent chance of the British people voting to quit in a referendum Cameron has promised to hold by 2017.

The opposition Labour party won’t hold a plebiscite if it wins the general election. That doesn’t mean the question will go away. Tory eurosceptics and the UK Independence Party will not give up – so there could well be a referendum after 2020.

Some continental politicians may trumpet indifference at the Brexit prospect, on the grounds that the United Kingdom has always been an awkward member and that, without it, the EU would be able to run its affairs more smoothly. But there are five strong reasons for keeping Britain inside the tent.

The first is precisely because Britain is often prepared to be awkward, calling a spade a spade – for example, when it raised doubts about the single currency project.

Second, the UK has a track record of pushing for free-market reforms – both to liberalise the EU’s market and cut trade deals with other economic blocs. Without the British voice, the EU might become more protectionist.

Third, the UK accounts for 15 percent of EU GDP. It now has the third-largest economy after Germany and France. In 30 years, it could have the largest, because its population is growing rapidly while Germany’s is falling. If Britain cuts itself off even partially from this single market, it will be badly hurt; but the rest will also suffer.

Fourth, a Brexit would upset the EU’s internal dynamics. Many other countries would fear an increase of Germany’s influence. Berlin, meanwhile, would worry that southern states would find it easier to gang up against it.

Finally, the EU’s foreign and security policy would suffer a severe setback. It is easy to mock the current approach which has little to show for itself. But one only has to look at the EU’s unstable neighbourhoods – Ukraine and Russia to the east, North Africa and the Middle East to the south – to appreciate that it is going to need to get serious in the years to come. Without Britain, the EU would have less clout.

So how can EU leaders cut the risk of Brexit?

For a start, Cameron needs to play the EU diplomacy game better. That means quickly making peace with Juncker. Why not invite him to Downing Street? The British premier should also propose a heavy-hitter as the UK’s own EU commissioner – somebody like William Hague or Michael Howard, both former leaders of his party.

Meanwhile, Cameron needs to build more alliances. He relied too much on Germany’s Angela Merkel. She may be the most important leader in the EU. But Britain also needs allies in Italy, France, Spain, Poland and so forth.

EU members offered Britain a couple of concessions at the summit. They said they would review the system of nominating future Commission presidents. This is important because the way in which Juncker was chosen amounted to a power grab by the European Parliament. The leaders should make clear that this will not set a precedent. Otherwise, power will have permanently shifted from national governments to the European Parliament. It’s doubtful that this is what the people want in any major EU country.

The summit also interpreted the phrase in the EU treaty calling for ever closer union among the people of Europe as “respecting the wish of those who do not want to deepen [integration] any further.” That formulation won’t satisfy British eurosceptics, for whom the phrase is a bugbear. But with a few tweaks this olive twig could become a full olive branch.

If Cameron does propose a heavy-hitter as Britain’s commissioner, other leaders should respond by offering that person a top job – ideally the task of completing the single market, which is still patchy in services including those delivered via the internet.

They should also sharpen up the work programme they have sketched for the next five years. The core of this should be: a renewed drive to complete the single market; free trade deals with the United States and Japan; a revamped energy policy; building up non-bank finance so it can take up the slack as banks shrink; and cutting red tape.

A plan like this wouldn’t just be good for growth and jobs in the EU. It would help the case of the Brits who want to stay in the EU. By cutting the risk of Brexit, that would help the EU too.

Comments
4 comments so far | RSS Comments RSS

I really don’t think anyone cares anymore we just want an end with it & will get on with what we have to afterwards but at least we wont have woody woodpecker banging off the side of our heads 24/7 issuing imbecilic diktats that may be relevant to a country in the South Med but totally pointless to the UK such case in point being water directives

Posted by thorpy63 | Report as abusive
 

Sort of right on the diagnosis, but so very off the mark on the prescription -

Brexit carries only a minimal risk of any significant deterioration in the terms of trade between the UK and the EU. Not plausible that UK would have less favorable trading status than the US has now, which UK can easily tolerate IMO. Also, …

If UK departs that puts both more financial pressure on the creditor-states that remain, and will likely inspire others to start asking why they stick around. Doubly so as the parliamentary voting-strength of the leftish-debtor-Catholic-South is magnified by the loss of UK votes, and more wealth transfers from North to South are enforced. Brexit could plausibly prove to be Act-I in the unraveling of the EU.

Since UK is now possibly on the path to ‘exit’, it seems improper for it to be angling for top spots in the bureaucracy. IMO Cameron should propose no one from the UK for any position – that display of detachment will send a frisson of fear through Merkel and quite a few others, and make it clear to the EU pols that Davey isn’t bluffing or half-hearted – ‘this is for real’ would be the message sent and received.

Posted by MrRFox | Report as abusive
 

The EU has failed its people both economically and politically.

Economically, it is impotent to secure a path to fuller employment and increased prosperity over much of its territories.

Politically, it has become a tool of American global military empire. The stranglehold of the Right/Left Washington neocons establishment on European foreign policy is likely to lead to a major war in our lifetime.

British civilization is too sophisticated and too distinguished to be dragged into that cesspool. They should get out while they can.

Posted by jrpardinas | Report as abusive
 

Unfortunately none of the above addresses the fundamental divide between Britain and the continent: less than 20% of the British public want more political integration with Europe and over 80% want less.

Among Europe’s elites, that number is reversed.

These views are in complete opposition and neither side is going to give way.

The odds of Britain STAYING in the EU are about 20%

Posted by celtthedog | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/