Column: Labour has just shrunk Brexit risks

Mar 14 2014, 03:01 IST
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SummaryLabour’s priorities for reforming the EU are broadly pro-business

The risks of a Brexit have just shrunk a lot. Ed Miliband, the UK’s leader of the opposition, has virtually ruled out a referendum on Britain’s European Union membership if he becomes Prime Minister in 2015. David Cameron’s Conservatives will need to win an overall majority in the next general election and then lose an In/Out vote to allow the UK to quit before 2020.

This is good news for business: a plebiscite, coming after a populist campaign, might easily produce the “wrong” result. An Out vote would put Britain at risk of losing full access to the EU’s single market, with which it conducts almost half its trade. It would also unleash a long period of uncertainty. Whoever is Prime Minister then will have to resign, likely to be replaced by a staunch eurosceptic who will then engage in acrimonious divorce talks with the rest of the EU. In the meantime, business would sit on its hands, and the economy suffer.

Meanwhile, Miliband’s priorities for reforming the EU—boosting competitiveness, tackling youth unemployment, completing the single market and decentralising power—are broadly pro-business. Labour’s move is also good for democracy. Holding referendums is only democratic when a big constitutional change is under discussion or when the people demand one. These conditions are currently not met on the topic of Britain’s EU membership.

While it is true that most of the electorate says it would like a referendum, Britain’s EU membership is low on their list of priorities. Meanwhile, there are no plans for a major treaty change that would alter Britain’s relationship with Brussels.

Miliband is, therefore, right to describe Cameron’s pledge of a 2017 date for a referendum as “arbitrary.” It was dreamed up last year in the hope of silencing his own eurosceptic backbenchers and stemming the drift of votes to the UK Independence Party (UKIP), which wants to quit the EU—a ploy that hasn’t worked.

Instead, Miliband is promising a referendum on Britain’s EU membership only if there is a transfer of power from London to Brussels. But he also argued, correctly, that this is unlikely during the next parliament, whose term will run from 2015 to 2020. There isn’t huge appetite across the Channel for treaty changes that will further centralise power.

By contrast, a plebiscite on Cameron’s timetable could be a mockery of democracy, as little or nothing has changed in the UK’s relationship with the EU. The shape of the eurozone

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