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A U.K. Exit From EU Offers No Promise of Better Fortunes

By Clive Crook
November 27, 2012 6:30 PM EST
Clive Crook
Clive Crook

Britain has always had mixed feelings about the European project. From the start of the drive to “ever closer union,” the U.K. feared being left out, yet never quite wanted to get with the program. In some ways, it signed up mainly to slow the whole thing down. Lately its doubts have grown. According to a new opinion poll, a clear majority of the British want to quit the European Union altogether.

Increasingly the feeling is mutual. A partnership can tolerate only so much reluctance. In a television interview this week, Italian Prime Minister Mario Monti (more tolerant of British ambivalence than many other European leaders) said he found that “the English manage to be quite exasperating when they ask, as a condition for remaining aboard this great European ship, particular exceptions, particular dispensations, that could amount to making holes in the ship and making it sail less well, if not sink altogether.”

Those dispensations never end. At the creation of the euro, the U.K. recused itself (a good move, it now thinks, despite an economic slowdown of impressive dimensions all its own). It wants nothing to do with parts of the EU’s planned response to the economic crisis, including proposals for a banking union and closer fiscal integration. London is unwilling, as always, to make EU budgetary contributions according to the same formula as other member states: Protecting Britain’s so-called rebate is ever the main goal of its policy on Europe.

Separation Agreement

At some point, enough is enough. Maybe a separation on friendly terms would be better for all involved. Well, it might come to that, and it’s wrong to dismiss a British decision to leave as “unthinkable.” Equally, though, since moving the country to a better location would be difficult, Britain ought to think hard about what divorcing Europe would mean.

Continued access on free-trade terms to the EU’s single market would be crucial for the U.K.’s prosperity. British euroskeptics like to point out that Norway and Switzerland, two of Europe’s richest countries, have free-trade agreements with the EU without being members of the union. True enough, but one shouldn’t read too much into this.

As a member of the European Economic Area, Norway is obliged, in effect, to accept EU obligations as a matter of course. Switzerland, as a member of the European Free Trade Association but not the EEA, is freer to negotiate its terms -- but the value of this privilege is questionable, because the negotiation is hardly between equals. In working out their deals, both outsiders have had to accept EU norms on product standards and other trading rules without being able to influence their design.

Leaving the EU doesn’t mean winning independence from it.

In addition, the U.K. couldn’t take for granted membership in the EEA and/or EFTA. Both would have to be negotiated with the existing members -- meaning the EU plus Norway, Liechtenstein and Iceland in the case of the EEA; and Norway, Switzerland, Liechtenstein and Iceland in the case of the EFTA. The U.K.’s arrival would transform these peripheral trade pacts. The existing members might think twice before letting that happen. At best, the new arrangements needed for Britain to thrive as part of the European economy (though not of the EU) wouldn’t fall instantly into place just because it quit the union.

Granted, there would also be benefits. The U.K.’s budgetary contribution to its European partners would fall. The obligation to support the EU’s stupid farm policies certainly wouldn’t be missed. And as a member of the EFTA, Britain would be free to negotiate free-trade agreements with other countries -- possibly including the U.S., again if prospective partners were willing.

Shrinking Britain

The main thing, though, is that the U.K. would stand aside from the EU’s larger political and geopolitical ambitions. For the most trenchant euroskeptics, this is really the point: Britain’s power of self-government and its weight in the world, they say, are surrendered when it pools sovereignty with its EU partners. The other side argues exactly the opposite: For a medium-sized country alone on the edge of an integrating Europe, pooling sovereignty is the only way to protect those assets. Without that, self-government and international clout are mere delusions.

The choice is more finely balanced than either admits. In or out of the EU, steadily rising living standards are possible but not guaranteed. In or out, Britain’s global weight will diminish, a function of the country’s continuing and inevitable relative economic decline. The right answer -- and this goes not just for the U.K. -- isn’t fixed one way or the other. It depends on the kind of union the EU strives to be.

In the worldview of many a British euroskeptic, there are equal measures of chauvinism and fantasy. But there’s a good measure of justified frustration, as well, over the EU’s persistent constitutional deficits. The union has the accoutrements of democracy but little real democratic accountability. The single currency was one result: overreach on a calamitous scale.

A pattern has been set. For decades, political integration was pushed much faster than the solidarity needed to sustain it. The economic crisis is widening this gap still more, and to a dangerous point, as Europe’s leaders strive to meet surging protests over EU governance with a forced march to closer political union.

Tiresome as the U.K.’s perpetual grievances may be, they aren’t groundless. The EU needs to be less ambitious, not more. If it continues to presume a solidarity that doesn’t yet exist, it will end up failing everybody -- with or without its most reluctant member.

(Clive Crook is a Bloomberg View columnist. The opinions expressed are his own.)

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Today’s highlights: the editors on Mohamed Mursi’s flirtation with tyranny in Egypt and on the EU’s Plan C for Greece; Margaret Carlson on Hillary Clinton’s next move; Peter Orszag on why vague proposals to limit tax deductions won’t work; Cass R. Sunstein on the behavioral economics of Christmas consumption; Richard Vedder on the evolving private-state-federal university.

To contact the writer of this article: Clive Crook at clive.crook@gmail.com

To contact the editor responsible for this article: James Gibney at jgibney5@bloomberg.net

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