Renegotiation Must Tackle More Than Immigration to Win an EU Referendum

While the negotiations around issues such as immigration are very important, they are not the whole story. Of perhaps equal significance are the developments within the EU itself. These changes may, in the end, have an even larger bearing on the outcome of any 'in-out' referendum, if and when the time comes.

Despite the headlines, all the opinion polls indicate that the British people want to remain in the European Union provided there are significant changes to our terms of membership. People don't want 'more Europe'. What they do want is more of the trading relationship which most people thought was on offer at the time of the last EU referendum in 1975.

However, while the negotiations around issues such as immigration are very important, they are not the whole story. Of perhaps equal significance are the developments within the EU itself. These changes may, in the end, have an even larger bearing on the outcome of any 'in-out' referendum, if and when the time comes.

What has the EU done well? The EU has done much which has worked well. It has provided a solid framework for co-operation between the different countries in Europe, which has been much more civilised and stable than anything which preceded it. The EU clearly also played a major role in pulling the countries previously under communist control towards western liberal democracy. Free movement of people, when this was very largely between countries with similar living standards, was greatly appreciated by the large number of British people who took advantage of this opportunity to move abroad.

In general, the free trade which the UK has with other Member States within the EU customs union has worked reasonably satisfactorily, although the UK has suffered continuous balance of payments problems and the main growth in trade has been in manufactured goods, where the UK has not done well, rather than on services where the UK has a major competitive advantage. Looking ahead, however, the prospects generally do not look so good and the prospect of these positive factors turning negative may well play an increasingly important role in the UK electorate's assessment of the pros and cons of continuing membership.

What is likely to be the future of the Eurozone? The Single Currency is clearly fraught with problems. The inability of most countries within the Eurozone to compete with Germany has meant that they have had to retrench, thus hurting German export markets and pulling down the economic performance of the whole of the euro area, so that economic growth within it has almost totally disappeared. While there is certainly huge determination within the EU to avoid a break-up of the Single Currency, the price for achieving this objective looks ominously as though it will be economic stagnation within the Eurozone for as far ahead as it is possible to see. Furthermore, if the Single Currency did break up, this would undoubtedly lead to a major economic downturn before any economic recovery could get under way. The economic prospects for the EU, therefore, do not look at all good.

How will the Eurozone's problems affect EU governance? The Eurozone's problems are also very likely to have a large impact on the way that governance within the EU develops. To keep the Single Currency in existence there will have to be much tighter political integration between the Eurozone countries, including moves towards debt mutualisation and budgetary centralisation. The UK is not, of course, in the Eurozone, but the result is that we are inevitably going to be placed in at least something of an outer ring of EU membership. The danger then is that the inner euro-dominated ring determines EU policy in ways in which the UK may not want to share. There are already signs of this happening, particularly around financial services.

Where will this leave EU democracy? Democracy within the EU has always been fragile, not least because its institutions were originally established by people who were inclined to believe that officials knew better than politicians how public affairs should be run. The legacy of this way of thinking is the very powerful position that the Commission, the European Court of Justice and the European Central Bank all have, although none of those involved are elected. The trouble now is that moves towards centralising power in Brussels to deal with the Eurozone's problems, although strongly endorsed by the EU political class as well as the EU bureaucracy, are not supported by the electorates in probably any of the EU countries. There is thus a widening gap between those running the EU and the population at large, reflected in the rise of varying types of eurosceptic parties across the Union.

What about the free movement of people? A core founding principle of the EU is free movement of goods, services, capital and people within the Union boundaries. While free movement of people worked well during the earlier years of the EU's existence, recent developments have been much more problematic. This has been particularly so for the UK which did not apply the transitional restraints on migration which most other Member States did when the 2003 Accession Treaty brought most of the Central European countries into the EU.

The result was immigration on a scale which put severe strains on the UK both socially, in the employment market, and on the UK's accumulated social capital. A major issue is whether the EU is going to be willing to reduce the scale of migration within the EU, particularly as doing so will involve a treaty change potentially triggering referendums in countries including Ireland and France. These referendums are unlikely to produce the results which the EU wants. If no curbs on migration are put in place, however, this is the single factor most likely to lead to an "out" vote if a referendum on our EU membership is held in the UK.

What about legal changes? Yet another difficult area is going to be round legal changes and the boundaries between EU competences and those retained by national parliaments, particularly our own at Westminster. There is a widely held view that the EU is over-stretching itself in pressing for levels of uniformity which are not really necessary to make the Single Market work satisfactorily. Is it really right that the doctrine of Acquis Communautaire, whereby powers taken over by the EU can never be returned to the Member States, should be kept in place? How does this square up with the idea embraced in subsidiarity, which means that powers should be administered at as low a level as possible?

There are also concerns, particularly in England, that our common law system is being eroded away and replaced by the very different legal systems which are in place in other EU countries. Should European Arrest Warrants be applied in a uniform way across the EU with very different approaches to innocence before proof of guilt applying in the UK than elsewhere in Europe?

What about the cost of our EU membership? The net cost to the UK of our EU membership is steadily rising. In 2013 it was £12.2bn - almost twice as much as when the current Coalition government came to power in 2010. This cost is scheduled to go on rising over the coming years. Especially if our economy does not do as well during the coming years as our political leaders would have us believe will be the case, is this rising cost of EU membership really a burden which most people in the UK will want to bear?

Where does this leave the future? At some point in the coming years, it is likely that there will be an 'in-out' referendum on our EU membership. The result is likely to turn very substantially on what changes are made to our relationship with the EU between now and then. If the important concerns outlined above are addressed in a sensible and sensitive way, it is probable that enough changes will be made to keep the UK electorate on side and we will stay in the EU.

If, however, we are told that it is all too difficult, that achieving any special status for the UK is too problematic, and that we have the choice of staying in the EU on substantially our present terms or leaving, the result could be very different. A huge amount is going to depend on how the renegotiation process goes over the next few years.

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