EU referendum

EU referendum: the pros and cons of a 'Brexit'

Jan 29, 2016

An in/out referendum on Britain's membership could be held as soon as this summer

The Conservative election victory earlier this year activated a manifesto pledge to hold an in/out referendum on Britain's membership of the EU by the end of 2017. 

David Cameron promised to deliver the vote at a time when he was under pressure from Eurosceptic backbenchers within his own party – and when the Tories appeared to be losing votes to Ukip.

The prime minister has since embarked on a campaign to renegotiate the UK's relationship with the union ahead of the referendum and has outlined four key areas where he is seeking reform.

He has vowed to campaign with his "heart and soul" to keep Britain inside a reformed EU if an agreement on these reforms is reached. 

But a reluctance from within the EU for such changes – particularly those which require treaty change – could thwart Cameron's plans.

So what are the advantages and disadvantages of being a part of Europe? Would Britain be better off staying inside the club or going it alone?

The pros and cons of leaving the EU

Perhaps the greatest uncertainty associated with leaving the EU is that no country has ever done it before, so no one can predict the exact result. Nevertheless, many have tried.

Trade: One of the biggest advantages of the EU is free trade between member nations, making it easier and cheaper for British companies to export their goods to Europe. Some business leaders think the boost to income outweighs the billions of pounds in membership fees Britain would save if it left the EU. The UK also risks losing some of its negotiation power internationally by leaving the trading bloc, but it would be free to establish trade agreements with non-EU countries.

Ukip leader Nigel Farage believes Britain could follow the lead of Norway, which has access to the single market but is not bound by EU laws on areas such as agriculture, justice and home affairs. But others argue that an "amicable divorce" would not be possible. The Economist says Britain would still be subject to the politics and economics of Europe, but would no longer have a seat at the table to try to influence matters.

A study by the think-tank Open Europe, which wants to see the EU radically reformed, found that the worst-case "Brexit" scenario is that the UK economy loses 2.2 per cent of its total GDP by 2030. However, it says that GDP could rise by 1.6 per cent if the UK could negotiate a free trade deal with Europe and pursued "very ambitious deregulation".

Investment: The general view is that inward investment could slow in the lead up to the vote due to the uncertainty of the outcome and its consequences, following the precedent set ahead of the Scottish independence referendum in 2014. Longer term, there are diverging views: pro-Europeans reckon the UK's status as one of the world's biggest financial centres will come under threat if it is no longer a seen as a gateway to the EU for the likes of US banks, while Brexit campaigners argue London's unique appeal will not be diminished.

Barclays has put forward a different view, which will be seen as positive by those advocating a vote to leave. It reckons the departure of one of the union's most powerful economies would hit its finances and also boost populist anti-EU movements in other countries, the Daily Telegraph says. This would open a "Pandora's box" that could lead to the "collapse of the European project".

In this event, the UK could be seen as a safe haven from those risks, attracting investors, boosting the pound and reducing the risk that Scotland would "leave the relative safety of the UK for an increasingly uncertain EU".

Jobs: Free movement of people across the EU opens up job opportunities for UK workers willing to travel and makes it relatively easy for UK companies to employ workers from other EU countries. Ukip says this prevents the UK "managing its own borders". But, writing for the LSE, Professor Adrian Favell says limiting this freedom would deter the "brightest and the best" of the continent from coming to Britain, create complex new immigration controls and reduce the pool of candidates employers can choose from.

Regulations: Eurosceptics argue that the vast majority of small and medium sized firms do not trade with the EU but are restricted by a huge regulatory burden imposed from abroad. However, others warn that millions of jobs could be lost if global manufacturers, such as car makers, move to lower-cost EU countries, while British farmers would lose billions in EU subsidies.

Influence: Britain may lose some of its military influence – many believe that America would consider Britain to be a less useful ally if it was detached from Europe.

On the plus side, The Economist says Britain would also be able to claim back its territorial fishing waters, scrap caps on limits to the number of hours people can work per week, free itself from the EU's renewable energy drive and create a freer economic market. This would turn London into a "freewheeling hub for emerging-market finance – a sort of Singapore on steroids", it says.

But it concludes that the most likely outcome is that Britain would find itself "as a scratchy outsider with somewhat limited access to the single market, almost no influence and few friends. And one certainty: that having once departed, it would be all but impossible to get back in again."

EU referendum: the big questions for Britain

When will the EU referendum be held?

The date is not yet known, although Cameron has committed to holding it before the end of 2017. Some have suggested that the pace with which he has begun negotiations suggests the vote could be called next year in order to avoid a long period of uncertainty that might hurt businesses.

The government has ruled out holding it on 5 May 2016, the same day as elections to devolved parliaments in Scotland, Wales and Northern Ireland and for London's mayor. But this does not mean an early referendum is off the table.

What will the referendum ask?

The Tories recommended that the question be: "Do you think that the United Kingdom should remain a member of the European Union?" However, the government bowed to pressure from the Electoral Commission after concerns that the phrasing of the question might be seen as biased towards those campaigning to remain a part of the union. The wording has since been changed to:

  • Should the UK remain a member of the EU or leave the EU?
Who can vote in the EU referendum?

Eligibility will be based on the criteria for voting in a general election, which means citizens of most EU countries (who can vote in local and European elections in Britain) will not be allowed to take part. Anyone over the age of 18 who falls into one of the following groups can cast a vote: 

  • British citizens resident in the UK
  • British citizens resident overseas for less than 15 years
  • Citizens of Ireland, Malta and Cyprus resident in the UK
  • Commonwealth citizens resident in the UK
  • Commonwealth citizens resident in Gibraltar

However, citizens of Jersey, Guernsey and the Isle of Man, which are not in the EU, will not take part. Members of the House of Lords will be allowed to vote, despite being ineligible to cast a ballot at general elections.

What would happen if the vote was held tomorrow?

Britons narrowly favour leaving the EU, according to the latest opinion polls. The YouGov survey revealed that 40 per cent of people would vote in favour of a "Brexit", 38 per cent supported continued membership, 16 per cent were undecided and six per cent would not vote.

Who is campaigning on either side?

Several 'In' and 'Out' groups have launched in recent weeks and both sides have already begun campaigning hard. The main campaign trying to convince voters that the UK should remain in the EU is Britain Stronger in Europe led by the Tory peer and former M&S boss Lord Stuart Rose.  

On the Eurosceptic side, Vote Leave – which has the backing of some big-name business leaders – is confident it will beat Nigel Farage's Leave.EU to become the official group campaigning for a Brexit. The group appointed as the official campaign on either side will have the additional benefits of higher spending limits, television broadcasts and a grant.

What does British business say?

Most business leaders are thought to be strongly in favour of staying in the EU, but all the early running has been made by a business-focused anti-EU group. Business for Britain is led by the former chief executive of the right-leaning think-tank, the Taxpayers' Alliance, and funded by the Daily Telegraph. Its supporters include the director general of the Institute of Economic Affairs, Mark Littlewood, and the chief executive of fund management business Newton, Helena Morrissey CBE, John Caudwell, founder of Phones4u, Peter Goldstein, co-founder of Superdrug, Sir Stuart Rose, former chairman of Marks and Spencer, and Next chief executive Lord Wolfson.

What about the rest of the business community?

As a whole, entrepreneurs and business owners in Britain broadly remain in favour of remaining a member - and their enthusiasm may be growing. According to the Financial Times a survey of 3,800 businesses earlier this year found 63 per cent believe that leaving the EU would have a negative impact for Britain, a rise of 4 percentage points since the end of 2014. The sentiment seems to be reciprocated: of 2,600 senior executives in 36 countries across Europe in February, nearly two-thirds of those in the eurozone said a British exit from the EU would have a negative impact on the European economy.

How important is the EU to the UK in trade? 

The EU is our biggest trading partner and the largest single consumer market in the world, and thus to leave it would certainly involve risk. According to official figures, Britain exported about £147bn worth of goods and services to EU countries last year, a fall of about two per cent from 2013. As a block this makes it our biggest partner, but the top five individual nations include only two EU members: Germany and France. Anti-EU business leaders argue we would do better with China, currently our third biggest trading partner, if we were able to negotiate our own deals outside the EU. A secondary issue involves countries outside Europe which work with the UK because of its access to the European market. Barack Obama has repeatedly expressed a preference for the UK remaining in the UK, and ratings agency Standard & Poor's has suggested that banking groups might take their headquarters elsewhere if Britain were to leave the EU.

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A chain is as strong as its weakest link. Think of Spain, Portugal, Greece, and the answer is clearly "Yes, Britain would be better out of the EU". Its hard to soar like an eagle when you are surrounded by turkeys.

The current version of the EU with its emphasis on political and financial unity bears no resemblance to the trade zone we originally voted to join,aside from Germany and the UK only the eastern member states are showing any domestic growth,France,Italy and Spain are barely treading water,if the EU is to prosper it must return to its original concept,the euro has been a disaster and the drive for political union has been totally undemocratic.

Cameron should get off the EU fence and commit himself to either the YES or NO to Europe. He should lead not be led. The longer he sits on that fence he would only damage his rear.

Hopefully he will damage himself sufficiently that in a year he will be returned to the ranks of no-account posh boys with no idea about real life. Heard him on the radio the other day being interviewed, he was asked pointedly and repeatedly about the trashing he'd taken at the hands of UKIP, and all he could talk about was his superiority over Miliband. We need rid of such people, who neither lead nor follow, just muddy the waters and make themselves rich in the process

Let's get a bit provocative, shall we? Mr. Cameron quite clearly fails the courage to make up his mind: staying in or leaving the European Union. Besides, maybe the EU would be better off without the fickleness and obstruction of Great Britain, since this former world power may still have the pretension to be "Great", but has no longer the means nor the influence to claim that adjective. Besides, suppose the Scots do decide for their independance in September and ask for membership to the EU, where would that leave Merry Old England? In the dark and cold shadows of a once bright and glorious past? And with charming Nigel Farage as PM? Little Britain as a reality show.

TWe would be far better off leaving the EU. It costs us a fortune just to be a member--we are one of only two or maybe three contributors (Germany is a contributor and maybe a scandinavian country)--the rest are beneficiaries--they get far more than they pay in. The EU has destroyed many of our traditional industries--too numerous to mention here. It has the last word over our laws. The open borders mean that we are vastly over-populated. A tiny wee island sinking with about 70 million people all crammed together--far too many--by far. We have a trade deficit with the EU--they sell much more to us than we sell to them--so they gain from trade. The best countries, and most lucrative economies are ALL OUTSIDE THE EU. The EU is the past--countries in Asia , South America etc.--are where the future is. (and do not forget Australia , Canada, the USA and New Zealand.
The sooner we leave--the sooner we start to save money and reduce our one and a half trillion pounds deficit--a national disgrace.

The chain analogy is completely wrong. It was clear from the analysis above we would be taking massive risks if we decided to leave. try to put a value on the things we would lose (e.g. much manufacturing).

You sound like a Kipper...willing to grab any silly point that seems to support your pre-conceived policy position; sadly, there are many Kipper types who grab at the same nonsenses.

"There would also be costs"

FFS Kippers, read what followed that. Then try to think.

...with freedom come risks! We risked annihilation when we declared war on Germany over Poland in 1939. This nation now lacks confidence and leadership - not courage and enterprise.

Firstly, Winston Churchill did propose a United States of Europe, he also said that the UK should play no part in it.

Secondly a country technically has already left the EU, namely Greenland.

Yes of course there would be risks like anything, there are risks staying in and its costing us massively to do so.

There would be a few years of turmoil until it finally settled down. The Norway and Switzerland analogy is totally wrong, we are far more than these 2 countries. We import more than we export to the EU so they wont want a trade war with us it would cost them dearly. Besdies we are exporting less and less to the EU every year. We also had to end our trade relations with the anglosphere to join the EU and look what a disaster that's been. You look how well anglosphere countries are doing compared to EU countries. We would gain much back, control of our borders, our fishing grounds our right to trade with who we want.

What a load of rubbish. Mind you the EU would be better off without the UK, unfortunately they need our money and our military which is why they put up with us. As far as the EU is concern the UK makes no contribution apart from the above. My wife who is French worked for them for 4 years she knows exactly what the Eurocrats think of the UK and the British people and its certainly not nice.

What is all this FFS Kippers crap. Why dont you try thinking nugget. We know there would be costs, but they are worth it. Well obviously not to you you cave dwelling moss licker.