British “Remain” Vote Would Pave Way to Two-Speed Europe

A semi-detached Britain could widen the gap between euro and non-euro countries.

David Cameron Matteo Renzi Justin Trudeau
Prime Ministers David Cameron of the United Kingdom and Justin Trudeau of Canada listen to Italy’s Matteo Renzi at the G7 in Shima, Japan, May 26 (Palazzo Chigi)

We have looked at what might happen if Britain leaves the EU. What if it votes to stay in?

The reaction from financial markets on Friday morning would probably be one of relief. Few businesses want to leave and financiers would be spooked by the uncertainty surrounding the first-ever exit from the European Union.

The European Council convenes on Tuesday whatever the outcome of the referendum. If the vote is to remain, Prime Minister David Cameron (who would almost certainly stay on) would likely press other leaders to make good on the commitment they made in February to give Britain a special status in the EU.

Specifically, this would mean exempting Britain from “ever-closer union.” That may seem symbolic at this point, but it’s something British leaders could fall back on in the future if continental member states wanted to press forward.

Other promises were made to give national parliaments the power to block EU legislation and national governments, like Britain’s, the right to temporarily freeze in-work benefits for workers from other European nations.

In the long run, Britain’s semi-detached status would create the sort of two- or multispeed Europe that leaders from Angela Merkel to Nicolas Sarkozy have now publicly endorsed. This will likely mean that the eurozone countries continue to work more closely together, especially in terms of economic policy, while non-euro countries, like Britain, Poland and Sweden, will opt out of such schemes.