In a move that may cause some consternation in Europe due to its adverse implications for trade paterns in the continent, tomorrow British PM David Cameron will announce that he will propose a referendum on whether or not to stay in the European Union, a move that as the WSJ qualifies it “threatens to inhibit trade and cast a new shadow over the troubled bloc.” That may be a slight exageration: the referendum would take place, if at all, before the end of the first half of the next Parliament, roughly by late 2017, after an election. Which means that if Cameron loses the election, it is a non-issue, just as it would be a non-issue of course if the UK public voted to stay: according to a survey of the British public late last week by pollsters YouGov showed 34% indicated they would vote to leave in a
referendum, while 40% said they would vote to stay. A week earlier, 42%
said they would opt out, compared with 36% preferring to remain. Obviously a volatile topic for the population.
Still, as the WSJ notes, an “explicit vote on whether to leave the EU would be the first such move by
a member in some time. In 1985, Greenland, which is part of Denmark,
voted to leave the EU’s predecessor, the European Economic Community.
And, in 1975, the U.K. held a referendum on whether to leave the
then-EEC, which resulted in a large majority voted in favor of staying
in.” Finally, since the UK has its own currency it certainly does not have all the adverse side effects of being fully integrated into the Eurozone, which is why Cameron’s gambit may have very little if any market relevance. If anything, the move will merely further alienate the UK from the continent, aggravating a process that started over a year previously.
Realistically, this may be merely internal horse trading with the other UK parties, which however will have little impact on the broader macroeconomic picture.
Then again, with the BOE preparing to engage all other central banks in currency warfare, there may be far bigger issues on the horizon quite soon.
Mr. Cameron plans to say that, if elected in 2015, a Conservative government would renegotiate the U.K.’s relationship with the EU, and then hold a referendum on the new settlement in the first half of its five-year parliamentary term. Such a referendum would mark the first time in recent years that an EU member has offered its citizens such a vote.
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