Can Europe Make It?

UKIP earthquake? More like a tremor.

Marcus How
6 June 2014

A spectre is haunting the United Kingdom – the spectre of UKIP. Nigel Farage promised an earthquake that would shatter the British political landscape, and he delivered. The Westminster elite anxiously grope their puny necks, knowing their hour is up, the “People’s Army” sharpening their axes, just waiting to storm off to the Houses of Parliament next year. Feral patriots shudder with anticipation at the prospect of reclaiming their lost land. Angry readers of the Daily Telegraph and the Spectator – possibly badly dehydrated – warn anyone left of neo-Thatcherism that their hour is nearly up, their liberal arrogance irrevocably sealing their fate.

Actually the earthquake was more like a tiresome tremor. It’s worth bearing in mind that although UKIP secured 27.5% of the vote in the EU elections, this was on the back of a dismal turnout of 33.5%. What’s more, whoever hated the establishment was going to head to the polls to secure UKIP’s victory. But even then, the ‘Brexit’ camp didn’t top the polls in the elections. The three main parties – plus the Greens – all officially support continued British membership of the EU, despite differences on its future definition. In the event that the referendum planned for 2017 goes ahead, it looks likely that the majority of the electorate could be won over by the pro-EU case, so long as it is qualified.

However, amidst the noise, the EU elections have raised more profound questions about the sustainability of UK membership in the face of increasing Eurozone integration.

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The British relationship with the EU has always been strange. Today, eurosceptics argue that the UK was tricked; it entered the EEC in 1973 on the understanding that it was essentially a free trade zone, only to discover that it was a slow-burn crawl towards political union. This is a myth. Successive governments spurned membership precisely because they knew that the 1957 Treaty of Rome envisaged such a union. The European Free Trade Association (EFTA) was formed along with six other states in 1960 to provide an alternative[i]. But in the EEC, integration was proving that it could yield economic fruit. Faced with diminishing global status due to the loss of its empire, the UK applied for EEC membership in 1961, but only succeeded on its third attempt in 1973, thanks to French vetoes.

A referendum was held on the terms of membership in 1975 prompted by splits in the Labour government, which was the traditionally eurosceptic party at the time. The public approved the terms of membership by 68% (albeit on a turnout of 64.5%, which was low by contemporary standards). Nowadays, the Tories – who harbour a large minority of MPs whose euroscepticism is obsessive – claim that that referendum is now invalid, since Europe has changed beyond recognition, and a whole generation have been excluded from having a say.

The underlying motive for Tory euroscepticism is that the European Union became about more than just the single market, of which Margaret Thatcher was a pioneering champion. Deny it as they might, further integration was an inevitability, having acquired particular urgency following the breakup of the Bretton Woods system (BWS) in 1971. The BWS had served as a de facto global currency given the US dollar peg – and the ensuing years saw national exchange rates in disarray, exacerbated further by severe inflation. Charting a path towards a European monetary union (EMU) was pragmatic more than anything else. But in the years running up to the 1992 Maastricht Treaty, the Tories hatched alternative plans for a single currency that were red herrings designed to stall EMU. Seeing through this, the other member states ploughed on, leaving the UK isolated, its only consolation an opt-out from joining. The chances of London hosting the European Central Bank (ECB) were scattered to the wind; or worse still, to Frankfurt[ii].  

Maastricht was the beginning of the end of lasting British influence in the EU. It’s true that the UK recovered prestige during the leadership of Tony Blair, who was unashamedly pro-European – and a very unfashionable figure today. It also contributed to the integration of financial services markets across Europe, perhaps a negative contribution for some. In 2003, the country came reasonably close to joining, but Gordon Brown – then chancellor – was opposed. Since then, it’s been looking unlikely that the UK will ever join the euro, a reality compounded by the financial crisis. If I went into a pub and began extolling the benefits of Eurozone membership, I would probably be laughed out of the room, or possibly punched in the gut.

So if the UK isn’t going to join the euro, is there any point in remaining a member of the EU in the longer term? After all, even if the Tories weren’t bent on sabotaging British influence in the bloc, it’s likely that this will gradually happen anyway. As the Eurozone solidifies as the core of the bloc, British concerns and inputs will become increasingly redundant. In this scenario, it is reasonable to argue that the UK should leave, especially if the free trade deal between the US and the EU is successful. Despite its initial anger, the EU would probably end up cutting some sort of free trade deal with the UK, given its importance as a trading partner. The UK would be able to fully regulate migratory flows and everyone would be happy. Hooray. 

Personally, although I begrudgingly accept that this argument is reasonable, I don’t think it’s a desirable outcome. A free trade deal would spare UK business various export costs but the government would not have any power to shape European regulations. A number of foreign companies would probably move to Europe for the efficiency gains of the single market and currency, if nothing else. The British north-south divide would probably sharpen as a result, the economic situation worsened further by the withdrawal of EU structural funds. Like Norway, the government would still have to contribute to the European budget. European workers losing their right to free movement would exacerbate the undersupply of labour in certain sectors, such as construction.

It would be better for the UK to focus on extinguishing the fires it set on its bridges, and repairing them – in addition to building some new ones. There are increasingly powerful economies hovering outside of the Eurozone, which, like foxes, are continually testing the temperature of the water before crossing, but finding it too cold. Poland, in particular, has qualified scepticism towards Eurozone membership, finding the zloty to be a comfortable old shoe. Its power is such that the axis of influence will likely realign itself to encompass Warsaw, which will represent the eastern member states. If the UK were to make a sustained effort to build a coalition of interest with such countries, it may be possible to prompt the treaty change that would establish a second tier of members.

But first the UK must get its act together, a prospect that is currently looking unlikely. If that is the case, then the UK is probably destined for decline.

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Many thanks to those who have read my contributions to this blog over the last few months. I’ve enjoyed writing them almost as much as I’ve enjoyed reading the contributions of the other writers! See you in 2019 if the EU hasn’t collapsed, or perhaps more unlikely, if openDemocracy deign to have me back!


[i] Funnily enough, although it never took off, EFTA still exists today, being comprised of Iceland, Norway, Switzerland and Liechtenstein.

[ii] For more information on the Maastricht negotiations from the UK perspective, I would recommend Prof. Simona Talini’s book, ‘Globalisation, Hegemony and the Future of the City of London’. 

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