If the government gets its way, Britain will hold an in-out EU referendum by 2017, possibly before. The stakes for business will be high. The UK is intimately connected to Europe, through trade, investment and the millions of EU citizens working in British firms.
Not everyone in business agrees that a ‘Brexit’ necessarily involves severing those connections completely, but it’s rare to find someone here who thinks it just won’t matter. In Europe, it’s virtually impossible.
Volker Treier, deputy chief at the German Chambers of Commerce and Industry, told the BBC that the 400,000 British people employed by German companies could be ‘negatively affected’ by an out vote. ‘We are really astonished about this referendum’, he said (presumably he though David Cameron was bluffing all this time).
Cameron is in Germany today, attempting to drum up support for EU reforms. He said that if he gets them, he will campaign to stay in the EU. If not… well, he’s said he’d ‘rule nothing out’.
Though not set in stone (a lesson learnt from Ed Miliband, perhaps), the reforms Cameron seeks appear to range from restrictions on EU migrant benefits and freedom of movement from poorer countries to exemptions for the City from certain EU regulations and for Britain on the ‘ever closer union’ principle.
There is much appetite for reform in Europe, and Germany in particular. The Greek mess has convinced many Germans that the old system hasn’t worked. But even if Angela Merkel supports Britain’s reforms, they are very unlikely to succeed.
Europe is bloated. Its legal structures and institutions mean that changes on the scale proposed need to come through unanimous treaty ratification. Remember the EU constitution? Getting unanimous support from 28 governments on big issues is not easy, even when they enjoy widespread support from the political classes.
If those changes seem to make an exception for one country, it will be almost impossible. Put simply, if one state can demand favours by threatening to leave, they all can. ‘If it is about giving a special status to Britain that gives it advantages for nothing, then the answer is no,’ French Foreign Minister Laurent Fabius recently said.
It’s possible Cameron will concede on Britain-specific changes and focus on the more wide-ranging reforms, such as migrant rights. This, however, will bring him in conflict with eastern Europe. Numerous leaders there have said that freedom of movement is a ‘red line’ in any negotiation. Unanimous, remember?
The only reforms likely to be accepted are those everyone already agrees on, which doesn’t bode well for big changes. Does this mean business can expect Cameron to return home empty handed, pointing to continental intransigence and ready to campaign for an out vote? Not necessarily, but it’s a lot more likely than the EU radically transforming into an organisation the Conservative Party would be proud of in the space of only two years.