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Brexit - early referendum on the cards

Posted by Nick Prag at 14 May 2015, 16:25 CET |
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The surprise victory of Prime Minister David Cameron at the United Kingdom's general election last weekend has led to a chorus of concerned voices about the chances of a 'Brexit' from the European Union.

Doubts about Britain's future in Europe are likely to grow, and they are unlikely to be quelled until the outcome of a British referendum on the country's membership, promised by the end of 2017.

Business people in the UK have wasted no time in voicing their fears about losing the benefits of membership, and the damage that a Brexit would do to the British economy.

Some point out the benefits to British business proffered by the free movement of workers. Others to the advantage membership gives to British science, which benefits greatly from EU science funding, receiving much more than is put in.

Uncertainty over Britain's future in Europe is also unsettling investors, according to some analysts, who warn that a no vote would mean the United Kingdom losing a major draw-card for attracting foreign money.

Bank of England governor Mark Carney warned this week that "clarity" was needed about the planned referendum, and that Britain's relationship with Europe was important to business in the UK: "One of the big advantages this economy has is access to the European market. It's the largest economy in the world, it's our largest per destination, it's our largest investor in the United Kingdom."

The good news is that Mr Cameron is aware of the dangers of uncertainty to Britain's economy.

He has already been in contact with EU leaders to begin renegotiation of Britain's terms of membership.

He says he will campaign to stay in the EU if he can secure reforms such as changes on migration and benefits and the repatriation of certain powers to London.

There is little doubt that talks with European partners about the possibilities for re-negotiation have been under way for a while.

It is likely Mr Cameron can get some results on immigration , such as access to in-work benefits, and restrictions on access to the national health service - without the need for changes to the EU Treaty.

He may also have calculated that scrapping the European Convention on Human Rights is a price to pay for settling the European question early with his country and with his party.

Results of any renegotiation could be presented by the end of 2015, allowing the referendum to be brought forward to 2016, thus cutting short battles on two fronts -- in Brussels and against Eurosceptics in his own camp.

As for the country, the concerns should not be overdone. Despite anti-European, and anti-foreigner, comments in some press and in some quarters, opinion polls show that a majority are in favour of membership.

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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.