The Blog

UK Referendum Call Polarises Europe

This week's speech by David Cameron on a UK referendum has generated the usual caustic knee jerk response from Europhiles about swivel eyed Europhobes.

This week's speech by David Cameron on a UK referendum has generated the usual caustic knee jerk response from Europhiles about swivel eyed Europhobes. This shouldn't be a surprise given that a lot of the criticisms directed at the euro project 12 years ago have come to pass, with tragic consequences in terms on unemployment for countries like Greece, Portugal, Spain and Italy.

Youth unemployment in Spain is now just below 60% and it is hard to make an argument that this is not as a result of the policies being adopted across Europe as part of the EU convergence process. Is this really the price of more European integration, because if it is I would argue that it is too high.

Unfortunately the hysteria accompanying Cameron's announcement is a sadly entirely predictable response from people who seem to want to stifle debate on a subject that simply won't go away. The failure to ratify the Lisbon treaty in France and Holland in the last decade suggests that populations also need convincing about how much further integration can reasonably go.

This was probably behind the refusal of the Labour Party to honour its pledge of a referendum on some parts of the treaty in its 2005 election manifesto, but all this has done is crystallise opposition to what people perceive is an undemocratic demagogic institution.

Cynics will justifiably argue that it is an electoral ploy by the prime minister to appease the more eurosceptic elements in his party. While that may undoubtedly be true, does that also mean then we should not have the debate, given we will at some point in the future need to have it anyway.

An argument has been made that the uncertainty created by this move may deter inward investment to the UK, and that might be a concern, however the same arguments were made when we didn't join the euro.

Let's also not forget that we're seen five years of uncertainty in Europe about the sustainability of the single currency while inward investment in the UK has continued without too many problems even though we didn't join the euro.

Over the past few years Europe has undergone massive upheaval and change with the increasing likelihood that a number of countries will opt to move to ever closer political and fiscal union. This is likely to dilute sovereignty at a national level and it seems entirely appropriate to have a debate on this and its likely effect on countries who opt not to go down this route.

We've already seen in Italy and Greece unaccountable technocratic governments impose unpopular measures without proper debate.

Opinion polls seem to suggest that most voters in the UK would welcome a looser arrangement with Europe and certainly there are large parts of the business community who are frustrated at the amount of red tape and regulation they have to deal with on a day to day basis, in what is supposed to be a single market that is supposed to lower the barriers to profitable trade.

This week's decision to implement a financial transaction tax, despite unsuccessful historical precedents, may appear a laudable goal but it is in an unnecessary expense at a time when banks need to be encouraged to make more credit available, to cash strapped businesses, while at the same time boosting their capital ratios and writing off bad debts.

Critics also argue that it is not immediately clear what powers the prime minister would seek to claw back, though I would argue that you don't start a game of poker by showing all the cards in your hand.

It is also untrue to suggest that the UK is alone in efforts to reform the EU which has been shown to be completely undemocratic and divorced from the economic realities of normal people.

How else can you explain the extraordinary decision of the EU parliament to insist on massive increases to its budget when other countries have to cut back locally to enforce unpopular austerity measures in order to attempt balanced budgets?

A lot of politicians in Europe probably feel the same way about EU reform but dare not say so and are quite happy for Cameron to act as a lightning rod for this debate.

Make no mistake over the next few years Europe will undergo some significant changes as countries continue to wrestle with unsustainable debt burdens, aging populations and an increasing competitive threat from emerging markets.

If Europhiles really believe in the merits of their European project then they should welcome the debate with respect to Europe's future and not react by seeking to stifle it from those who have a slightly different view about Europe's future and its shortcomings, of which there are many.

MEP's like ex Belgian prime minister Guy Verhofstadt are ideal recruiting sergeants for a "No" vote with his strident name calling and general anti-UK rhetoric every time the subject of reform is brought up. Certainly his comparison of Cameron as a suicide bomber does him no credit at all.

As far as Europe's future is concerned and the UK's role in it is concerned, it is about time all the various interested parties grew up and debated the key issues that are of concern to voters in the UK, and across Europe who feel that Europe's politicians occupy a completely different universe to the one that they all have to live in.

Whatever Cameron's motive in calling for an in/out referendum for the UK the hope is that the self-imposed deadline will concentrate minds away from the incessant navel gazing of the last five years?

There is some evidence that Cameron's move might have concentrated German minds after Angela Merkel remarked that she's ready to listen to the UK's wishes if they are "fair."

We shall see how this plays out, but if Europe is too succeed then a proper debate needs to start with respect to the current direction of travel, as the price being paid in some countries for some of the reforms appears to be far too high.