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Cameron Promises Referendum by 2017 on U.K. Leaving EU

By Gonzalo Vina, Robert Hutton and Kitty Donaldson
January 23, 2013 8:11 AM EST 31 Comments
David Cameron, U.K. prime minister, delivers a speech on Europe at the Bloomberg L.P. offices in London, U.K., on Wednesday, Jan. 23, 2013.
Photographer: Matthew Lloyd/Bloomberg
David Cameron, U.K. prime minister, delivers a speech on Europe at the Bloomberg L.P. offices in London, U.K., on Wednesday, Jan. 23, 2013.

Prime Minister David Cameron pledged a referendum on Britain leaving the European Union, drawing rebukes from Germany, France and his own coalition partner.

Cameron, describing British backing for the status quo in Europe as “wafer thin,” said he would put the question to a popular vote by the end of 2017, if re-elected in two years and once he has negotiated a return of some powers to the U.K. He said that he wants the U.K. to remain in the EU.

“When we have negotiated that new settlement, we will give the British people a referendum with a very simple in-or-out choice,” Cameron said in a speech today at Bloomberg LP’s European headquarters in London. “To stay in the EU on these new terms, or come out altogether.”

Cameron is responding to pressure from lawmakers in his Conservative Party for looser ties with the EU or an outright departure from the union. European leaders have rejected his calls to renegotiate membership terms. Liberal Democrat Deputy Prime Minister Nick Clegg and the opposition Labour Party criticized the plans and the U.S. expressed concern about the implications of a U.K. outside the EU.

“Cherry-picking is not an option,” German Foreign Minister Guido Westerwelle told reporters in Berlin today. The EU needs “more, not less, integration,” he said, arguing that the U.K. should stay an “active and constructive part” of the 27-nation bloc.

‘Own Wishes’

Chancellor Angela Merkel, while saying that Germany is “certainly prepared to talk about British interests,” told a news conference in Berlin that “you have to keep in mind that other countries have their own wishes and we always have to come to a fair compromise in the end.”

“A single market without Great Britain doesn’t make much sense,” France’s European Affairs minister, Bernard Cazeneuve, told reporters after a meeting of President Francois Hollande’s Cabinet in Paris. “Great Britain would lose a lot without the single market.”

Clegg attacked Cameron’s announcement.

“We should always be governed by what’s in the national interest,” the Liberal Democrat leader told Sky News television. “Years and years of uncertainty because of a protracted, ill-defined renegotiation of our place in Europe is not in the national interest because it hits growth and jobs.”

Opinion Polls

The 2015 election remains Cameron’s biggest obstacle. Opinion polls show the Tories losing support to the anti-EU U.K. Independence Party and trailing the Labour Party by around 10 percentage points.

The pound was trading at $1.5858 as of 12:54 p.m. in London, up 0.1 percent on the day. Ten-year government bonds were little changed, leaving the yield at 2.02 percent.

The speech, which Cameron postponed after planning to give it in Amsterdam on Jan. 18 because of the hostage crisis in Algeria, marks an attempt to solve a three-decade predicament that has haunted Conservative premiers. The premier has ceded to the demands of all but a handful of the most euroskeptic lawmakers by raising the specter of an exit from the EU.

“We now have a position that 99 percent of the party would be happy to endorse,” Malcolm Rifkind, who served as foreign secretary in John Major’s government in the 1990s and describes himself as a “moderate euroskeptic,” said in a telephone interview. “It was a breath of fresh air.”

No ‘Isolationist’

Cameron stopped short of meeting demands for an immediate plebiscite sought by some in his party.

“I’m not a British isolationist,” he said. “I never want us to pull up the drawbridge and retreat.”

Labour leader Ed Miliband said he’s opposed to a popular vote as planned by Cameron.

“No, we don’t want an in-out referendum,” Miliband told the premier during Cameron’s weekly question-and-answer session in Parliament. “My position hasn’t changed, it’s his position that’s changed. He’s been driven to it not by the national interest, he’s been dragged to it by his party.”

Cameron told lawmakers that his “approach is what the British people want; it’s right for business, it’s right for the economy.”

British finance-industry executives stressed the need for the country to stay in the bloc, even as they acknowledged the need for a review of relations.

Necessary Debate

“The U.K. needs to remain very much part of the EU, but I can completely understand why Prime Minister Cameron thought it necessary to offer the people a referendum,” Standard Chartered PLC Chief Executive Officer Peter Sands told Bloomberg Television’s Francine Lacqua at the World Economic Forum’s annual meeting in Davos, Switzerland.

“For the business sector in general, the long-term interest of Britain is in the EU,” Prudential Plc (PRU) CEO Tidjane Thiam said in an interview. “The EU needs to be reformed. There’s a lot of frustration around; that debate needs to happen.”

Cameron’s comments on the prospect of leaving the union contrast with a celebrated speech by his Tory predecessor, Margaret Thatcher, in Bruges, Belgium, in 1988, in which she said “our destiny is in Europe.”

Britain, the EU’s third-biggest economy, first applied to join the then European Economic Community in 1960. That step was vetoed by French President Charles De Gaulle. Tory Prime Minister Edward Heath restarted negotiations, and Britain joined in 1973. His successor, Labour’s Harold Wilson, staged and won a referendum in 1975 on staying in, with his Cabinet split.

Budget Rebate

Thatcher won an agreement in 1984 that the U.K. should get a rebate on its budget contributions that it still receives to compensate for its low level of farm subsidies. Labour Prime Minister Tony Blair’s plan to join the European single currency after 1997 was blocked by his finance minister, Gordon Brown.

A YouGov Plc poll for the latest Sunday Times newspaper found 40 percent of respondents saying they would vote to stay in the EU compared with 34 percent who say they would vote to leave. YouGov polled 1,912 adults on Jan. 17 and Jan. 18.

The prime minister told his audience that “public disillusionment with the EU is at an all-time high.”

Ben Page, the chief executive officer of polling company Ipsos Mori, questioned that assertion, noting that only 2 percent of voters this month named Europe among the most important issues facing the country. “It’s just not an obsession with most people,” he said in a phone interview.

Cameron’s Timetable

Cameron said that legislation will be drafted before the 2015 election and introduced immediately after the vote if the Tories win a majority. The bill allowing a vote to be held would then be passed by the end of that year.

“We will complete this negotiation and hold this referendum within the first half of the next Parliament,” Cameron said.

Such commitments show how far Cameron has been pushed by his own allies. He has said he didn’t expect Europe to be a significant issue in his first term.

Cameron said the deepening integration of the 17 euro countries, which don’t include Britain, and the demands of global competition raise “fundamental questions” about the nature of the U.K.’s relationship with the EU.

“If we don’t address these challenges, the danger is that Europe will fail and the British people will drift towards the exit,” Cameron said. “I do not want that to happen. I want the European Union to be a success. And I want a relationship between Britain and the EU that keeps us in it.” European Union.

UKIP’s ‘Achievement’

UKIP leader Niger Farage said his party “regards today’s speech as its greatest achievement” so far.

“No longer can the case for British withdrawal be confined to the margins,” Farage, a member of the European Parliament, said in an e-mailed statement. “The genie is out of the bottle.”

The U.S. repeated its call after Cameron’s speech for Britain to stay in the union.

“A strong Britain in a strong EU is what I think is best for Britain, Europe and the United States,” Undersecretary of State Robert Hormats said in an interview in Davos.

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net; Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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