Today sees the publication of the University of Bath's Instiutute of Policy Research's referendum policy brief, a document that brings together contributions from a number of academics with the purpose of informing readers about the issues at stake in the EU referendum. Many of these issues are not new, but the way they are debated has changed dramatically over time.
In the 1960s and 1970s, it was the Conservative Party that led Britain into membership of the European Economic Community. Seeking a new anchor for Britain’s geo-political interests after decolonisation and the fiasco of Suez, and despairing of the capacity of Britain’s post-war Keynesian economic settlement to solve its class conflicts, Conservative leaders orientated towards Europe’s successful social market models. The Labour Party went along with this reluctantly: for the most part, it remained Eurosceptic and wedded to the idea that the unitary British state was the vehicle for social progress. But by holding a referendum on Britain’s membership of the common market in 1975, it was able to paper over its internal divisions.
Both positions were upended by Thatcherism, which imposed a new political economic settlement on the UK that dispensed with the coordination of class interests, while shifting to a more aggressive Atlanticism in foreign policy. Europe was no longer a source of inspiration for economic policy, but instead an enlarged free market for British trade. Manufacturing declined – although foreign direct investment in key sectors like automotives was facilitated on the basis that the UK had access to the European market – and a new growth model was created, which had the finance sector, centred on the City, and consumption-led services, with a prominent role for the housing market, at its heart. In turn, this changed the terrain for the British left, which came to see Europe as a means for renewing social partnership in the economy, and as a post-national platform for revitalising the Keynesian project of full employment and investment-led growth in conditions of globalisation. Euroscepticism waned on the left, as it waxed on the right.
Thatcher’s settlement helps illuminate the balance of forces in the contemporary EU referendum campaign. The big investment banks and the main financial service interests in the City are firmly in favour of Remain: Britain’s membership of the European Union cements their dominance in Europe, and passports their UK regulatory regime into the single market. The prominence of finance services in Britain’s post-Thatcher economic model – and the taxes they contribute to the financing of public services – ensures that their interests have considerable political support. Pro-Europeanism in the City is in part a legacy of the 1980s Big Bang.
Similarly, access to the single market explains the solid support for the EU amongst large companies, in both manufacturing and service sectors. This is particularly true of foreign-owned enterprises, such as Japanese and Indian car manufacturers, and explains why the private sector trade unions in British manufacturing are strongly in favour of remaining in the EU. Their interests lie in retaining access to the single market too (if Thatcherism had an industrial strategy of any kind, it was to secure foreign direct investment in ailing sectors like car making, and to ensure that the British defence industries were strong; ironically, companies in these sectors are now strongly pro-European). Service sector companies that have become heavily reliant on EU migrant labour – particularly in the agriculture, food processing, and hospitality sectors – are also largely pro-European. So too are the public sector unions, but this is largely the result of the social protections afforded by EU law. Where membership of the EU appears to threaten their employment interests – as with, for example, the argument that the proposed EU-US trade deal, TTIP, will open up the NHS to private sector competition – they can tilt towards Euroscepticism.
What then are the social bases for leaving the EU? Non-exporting service sector companies and small businesses are more likely to be Eurosceptic (Wetherspoons may be considered emblematic of the former). The ranks of the self-employed, and those workers outside the unionised public and private sectors who are most exposed to wage competition from EU migrants, are more likely to be Eurosceptic. Before the financial crisis, a combination of consumption-led wage growth, tax credits and household debt upheld their incomes; post-crisis they have seen their wages and incomes squeezed. They are fertile territory for the “take control” message of the Leave campaign – just as many responded with alacrity to the property owning democracy discourses of the 1980s.
Indeed, in recent polls, the strongest support for leaving the EU has come from semi-skilled and unskilled working class voters, in particular the categories of C2 and D social class voters used by pollsters. ICM’s latest phone poll had 62% of C2s in favour of leaving, compared to 24% for Remain (EU referendum weighted, certain to vote) – the highest of any age or class demographic. The latest ORB poll for the Daily Telegraph had similar figures: of all those definite to vote, and excluding don’t knows, 60% of C2s were in favour of leaving (compared to 40% for Remain) as were 61% of social class D voters (compared to 39% for Remain). Remain chalks up similar leads amongst social classes A and B (whereas interestingly social class E was much more evenly split).
On their own, these voters would not have sufficient electoral muscle to swing the referendum in the UK against the social bloc in favour of staying in. But they are buttressed by the retired population of older voters, who are much more Eurosceptic than their children and grandchildren. Their high turnout rates at elections makes them a key constituency.
A similar electoral logic is at work in Germany, where older, socially conservative voters are deserting the SPD and CDU, whom together represent the dominant pro-European social bloc of organised workers and employers in the leading export sectors, as well as the unionised public sector. Over the last two decades, German workers have traded real wage increases for external competitiveness and high employment, ensuring that Germany has a large surplus with the rest of the Eurozone. But deflation has undercut the returns to savings for retired Germans, while the refugee crisis has added a cultural-conservative component to their discontents. They are turning increasingly Eurosceptic. Recent comparative political economy goes a long way to helping us understand these European debates in the UK and other European countries, such as Germany, but it needs supplementing with the political science literature to account for the allegiances of different voting groups, such as older voters.
Older voters’ concerns are cultural and democratic, rather than driven by their labour market position – though they prize economic security. Whether they will vote on the latter, rather than the former, will be a major factor in determining the outcome of the referendum.
Many of these same issues are examined in more detail in the IPR referendum policy brief, which can be found here. This collection of pieces by academics at the University of Bath gives a wider view of Britain’s referendum, and focusses on major policy questions the UK faces in making an informed judgement about its EU membership.