Brexit referendum set for 23rd June

"La lettre B" l'essentiel de l'actualité économique et financière européenne décryptée

Brexit referendum set for 23rd June

“This morning I have just chaired a meeting of the Cabinet in which I updated them on the special status we have secured for Britain. And the Cabinet agreed that the Government’s position will be to recommend that Britain remains in a reformed European Union. […] I will go to Parliament and propose that the British people decide our future in Europe through an in-out referendum on Thursday, the 23rd of June. […] The choice is in your hands, but my recommendation is clear: I believe that Britain will be safer, stronger and better off by remaining in a reformed European Union.”

These words are taken from a speech by the British Prime Minister, David Cameron, of 20th February, following on from a long and exhausting negotiation in Brussels between the UK government and the continental EU countries. The United Kingdom already has its coveted “special status”; now the British people are in charge of making one of their most important decisions of the century, which could influence the future of the whole continent. The European Union has never had to face the exit of one of its members (and here we are speaking about one of the most influential).

Let’s focus on the contents of the deal and try to understand which special conditions the UK would gain should it remain in a “reformed European Union.”

First, the UK confirms its position as a somewhat borderline country with one foot in and one foot out. This situation would become more significant and would even touch upon some fields that were previously considered untouchable.

Indeed, the British Prime Minister has obtained a derogation from one of the declarations of the preamble to the 1957 Rome Treaty, the “ever-closer union among the peoples of Europe.” The best explication of this formal change is another part of the previously cited speech by David Cameron: “we will never join the Euro, we will never be part of Eurozone bailouts, never be part of the passport-free no borders area, or a European Army or a EU super-state.”

But the obtained changes cannot simply be viewed as formalities. The most concrete achievement for the British government would be the derogations regarding economy and immigration policy. firstly, the UK would obtain the independence of the City: British banks and insurance would not be in the European Single Rulebook, leaving most of the power of decision in London. Nevertheless, the UK accepts the general rule of a free and equal market, without any special conditions and always under the control of European authorities such as the European Banking Authority and the European Securities and Markets Authority.

The second important achievement for Cameron is the limitation on the welfare state for European immigrants. For the next seven years, so-called “welfare tourists” will need four years to benefit from the complete serviced offered by the British health care and social system. This is the first time that a similar kind of “discrimination” between EU citizens has been accepted. However,

Cameron was not able to obtain a retroactive extension of this rule. Cameron has repeatedly underlined the fact that he believes the UK is stronger in the EU; however, anti- European sentiment is increasingly widespread. Moreover, some EU Member States have indicated that they are coming round to the opinion that the EU might be better off without a hesitant member such as the UK. It remains to be seen whether the UK public will believe that Cameron made enough of a stand in his demands of the EU and whether they will accept the concessions achieved from the other Member States. It appears in any case that the results will be tight and that even an “in” vote may not guarantee a simple future for the UK in the EU.

Giovanni Zorra

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