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27th Aug 2016

UK better off in EU for now, says eurosceptic think tank

  • Canary Wharf, London: Concern about its prized financial sector is one of the reasons for London's ambivalence about the EU (Photo: harshilshah100)

The UK would be better off staying in the EU, the country's foremost eurosceptic think tank says, amid a growing debate among Conservatives on the merits of a British exit from the European Union.

"From purely a trade perspective, EU membership remains the best option for the UK," Open Europe argues in a report published Monday (11 June).

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"All the alternatives come with major drawbacks and would all … require negotiation with and the agreement of the other member states, which would come with unpredictable political and economic risks," it continues.

The report examines the idea - gaining traction among some eurosceptic Conservatives - that Britain could leave the EU but maintain its current trade relations, with the EU accounting for 48 percent of total UK goods and services exports.

But it rejects the four touted alternatives. The "Norway model," for example, would free the UK from expensive fishing and farm rules while giving the country access to the single market. However, the UK would have no say over the EU laws it would be obliged to implement.

Meanwhile, the "full-break" - a simple exit without any kind of brokered deal - would see British exporters "suddenly faced with new tariffs."

But the think tank, which is influential within Prime Minister David Cameron's Conservative Party, says "growing public hostility" means it should renegotiate it terms of membership.

"The common agricultural and fisheries policies, EU-wide regional funding, the impact of EU social and employment regulation on the UK economy and contributions to the EU’s budget" are cited as the downsides of membership.

And it notes that its current conclusion that EU membership is beneficial for trade reasons could change if the Union were to become more protectionist in the future.

The current eurozone crisis, likely to prompt treaty change, would be a useful opportunity for the UK to get its preferred "pick and mix" membership.

"As the Eurozone is likely to need a new set of EU Treaty arrangements to move towards further integration, which the UK must approve, Britain will have a unique opportunity to stake out its own model for EU membership."

The report comes as Cameron's Conservative party has been divided between hardliners who want Britain to leave the EU and moderates who want its membership renegotiated.

It also comes amid a wider academic discussion in Britain about its EU future. A recent paper by David Rennie, former Brussels correspondent for The Economist and now the magazine's political editor, suggests London's continued EU membership can no longer be taken for granted.

"It would be a mistake to assume, complacently, that sullen British acceptance of the status quo will continue indefinitely," writes Rennie.

"To a striking and novel degree, when senior officials hold policy seminars or forward-looking strategy debates, it is no longer seen as outlandish or naive to suggest that, if eurozone integration leads to grave clashes with British domestic priorities, Britain might end up better off out. As an idea, the possibility of British withdrawal is becoming normalised."

Meanwhile at the EU level, British recalcitrance may coincide with the sense of urgency within parts of the eurozone that further integration is the only way to solve the single currency crisis.

"We should not stay still because one or other [member state] does not yet want to join in," said German Chancellor Angela Merkel last week making the case for a two-speed Europe when it comes to giving Brussels more powers.

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