British European Union Membership at Crossroad

Analysts from the geostrategic consultancy Wikistrat reflect on Britain’s future in Europe.

Euroskeptic currents have been strong of late in the Her Majesty’s kingdom, but also the Anglophobe ones in continental Europe. Westminster finds itself divided over the level of European integration best to pursue.

Having opted out from many “European” projects deepening integration, many Tory backbenchers claim that Europe’s woes justify further distance, especially if the European Union’s answer to the crisis is financial centralization.

While English skepticism toward European Union isn’t new, the sniping occurs at a time when the body itself is undergoing the greatest stress it has experienced since its inception. With potential breakaway regions like Catalonia in Spain, not to mention Scotland for the United Kingdom, raising questions of sovereignty even within member states as opposed to among them, the long-term future of European integration is in serious doubt. These debates are no longer merely exercises in rhetorical throat clearing but legitimate challenges to the status quo.

Depending on the future of British membership and the extent to which other states wish to centralize fiscal control, analysts in Wikistrat’s Europe Desk see four scenarios for British engagement with Europe.

Bureaucratic apartheid

Confronted with a lose-lose situation, British prime minister David Cameron decides to hold a referendum on British membership in the European Union. He would in this case decide to campaign to stay in the EU, which would receive some support from the Labour Party. However, many Tories are likely to denounce Cameron’s campaign, exacerbating the divide within the Conservative Party. It would lead to the downfall of his government.

Cameron would nonetheless save Britain’s role in the EU, accepting some of the new European budget measures while still opting out as much as possible. Such an outcome would constitute an outrage for a majority of Tories and Independents who will likely continue to pressure for an exit. A number could very well bolt to UKIP. The drama is likely to keep Britain on shaky grounds but any British government will hope that events in the European Union present a part of the solution.

All is well on the continental front

Feeling pressured by fellow European heads of government and anxious to deny his opposition the claim of Tory extremism, Cameron decides to capitalize on the halt in European fiscal centralization to declare a “victory for Britain” against the creeping European federalists and their integration by stealth.

Europe’s willingness to drop fiscal and monetary policy uniformity proves that national dynamism is superior to the political path dependency which European integration had been on.

This outcome — which is as much the merit of British zealous sovereignty and European bureaucratic inefficiency — allows Cameron more options. The Liberal Democrats in his coalition feel that they have lost the European debate in its entirety and the Conservatives are polling stronger than ever.

EU is dead, long live EFTA

David Cameron is forced to open a referendum on British membership by his own Conservative Party and competition on the right. Given recent opinion polls, a majority would likely vote to opt out altogether.

Most analysts describe the nation’s choice to leave as rational. First, because Britain’s economy is dependent on flexibility, not productivity. Inflexibility is a partial cause of current financial problems in the European Union.

Second, integration of the eurozone would leave the United Kingdom out of many important policy decisionmaking processes, such as financial services regulation. Britain has already opted out of many treaty elements in the past, setting it far behind the rest of Europe in terms of integration.

Britain’s exit would face it with economic uncertainty, not knowing how to regain competitiveness by global standards, nor able to join the European single market. Indeed, the country will most likely have to follow single market regulations in areas where the continent does not “vote with its feet” and relocate to the United Kingdom as financial services have significantly done, making Britain a world leader in the industry.

The sinking ship’s coup de grâce

This scenario plays out similar to the last once except the United Kingdom is in a stronger position when Europe fails to integrate further, leaving it with the flexibility to engage with European Union member states separately.

Instead of facing economic uncertainty, Britain manages to follow its independent economic policy by fostering ties with the Canada, the United States and emerging economies in Asia and Latin America. Leaving the European Union also enables Britain to explore shale gas unabated, raising the chances of Britain attaining energy independence.

Marinko Bobic, Greg R. Lawson, T. Michael Lutas and Miguel Nunes Silva contributed to this analysis.