Welcome to the EU rollercoaster, Prime Minister

Renegotiation with Europe is going to be a delicate task – especially given the Tory party’s delicate nerves

30 May 2015

9:00 AM

30 May 2015

9:00 AM

We have just had a very insular general election campaign, but the mood at Westminster is now determined by news from foreign capitals. There was a flurry of excitement last Wednesday when the German finance minister, Wolfgang Schaüble, suggested linking the British renegotiation to eurozone reform. It led to much talk of a European ‘Grand Bargain’, with Germany and the northern European countries given greater supervision of eurozone finances, the French and the southern Europeans given an explicit, written commitment to ‘solidarity’ within the currency union, and the British offered single-market protections, an opt-out from ‘ever closer union’ and the welfare changes it wants.

If this deal could be secured, a major Tory split over Europe would be averted. In these circumstances, 80 per cent of Tory MPs would back staying in, according to one experienced Eurosceptic campaigner.

But the weekend ended on a very different note. The French press reported that François Hollande and Angela Merkel had agreed a deal on eurozone integration which did not involve treaty change, removing Britain’s negotiating leverage. Cue much Tory grumbling about how treaty change, or at least a commitment to it, was vital to the success of the renegotiation.

In truth, things were not as good for Cameron and the renegotiation as they appeared on Wednesday, nor as bad as they looked on Monday. Over the next few months, the political class will tend to respond to every pronouncement from a European leader in the same herd-like manner that it did to opinion polls during the election campaign.

No. 10 is braced for such over-reactions. It is why Cameron has said that there’ll ‘be ups and downs — you’ll hear one day this is possible, the next day something else is impossible’. However, through this fog, his limited strategy for the renegotiation is becoming clearer. As one Cabinet minister explained, they ‘want to move it fast’ and have decided to ‘focus on three or four big things and make a really big push on them’.

The new Cabinet committee that Cameron has set up to deal with the referendum indicates the areas in which the government is seeking concessions. As well as the holders of the great offices of state, it includes policy chief Oliver Letwin, Chief Whip Mark Harper and the Europe minister David Lidington. What’s most revealing is the other two departmental secretaries of state invited, Iain Duncan Smith and Sajid Javid. The presence of the Welfare and Business Secretaries indicates that the main emphasis of the renegotiation will be on changes to EU citizens’ access to tax credits and the British welfare system, and deregulation and single-market protections for countries such as Britain which will never join the euro.

Tory insiders suggest that Duncan Smith and Javid, two of the Cabinet’s most open Eurosceptics, have been put on the committee to bind them into the government’s strategy. Having served on it, it will be harder for them to resign over the final deal.

There is a danger for Cameron in trying to crack on too quickly. As party grandees are warning privately, if he rushes the renegotiation he will irritate those in his party who don’t want to leave the EU but do want substantial change to Britain’s terms of membership. This could sour relations with the parliamentary party and make governing with a majority of 12 almost impossible.

For the moment, Cameron has momentum and events on his side. Cabinet ministers who, when the referendum was an abstraction, used to talk about resigning to vote No, strike a different tone now the vote is happening. This is partly because no one wants to align themselves with Nigel Farage. Optimistic free traders don’t want to join forces with a man who has campaigned in — to use the words of the Ukip leader’s colleague Patrick O’Flynn—a ‘snarling, thin-skinned, aggressive’ manner. Indeed, if Brussels was trying to invent the British Out campaign, it would probably come up with something similar to what Ukip became during the general election campaign.

But there is also political calculation behind this change of heart. At the moment, the chances of No winning look small. ‘Euroscepticism is scattered to the four winds,’ laments one Tory veteran of the cause. He is not alone in his pessimism. Several of those closely involved in the successful campaign against the euro predict that No will do worse this time than it did in the previous referendum in 1975, when it garnered less than a third of the vote.

However, there are two events that could change the debate. The first is the Labour leadership contest. If Andy Burnham wins, he’ll make a lot of noise about the need for renegotiation to deal with European immigrants supposedly undercutting wages of British workers. He told the Observer that ‘if Cameron doesn’t deliver legislative change in terms of abuse of the rules of free movement by agencies and the effect on people with jobs here, it won’t be good enough. It really won’t be good enough.’ Under pressure from Labour, Cameron may feel obliged to go further than he otherwise would on free movement and benefits access. Burnham’s comments are a reminder of how difficult it will be hold together a pro-European coalition that is trying to include multinationals and the trade unions.

The second is some external event, the most obvious possibility being a Greek default. The Athens government has admitted that it doesn’t have the money to pay the IMF next month. Combine this with the almost total lack of goodwill between the Syriza administration and Greece’s creditors and you can see how a default could happen. The effects on the EU would be dramatic and unpredictable. In Britain, there would almost certainly be demands to take advantage of the moment to radically alter the UK’s relationship with the EU.

For the moment, the authority that his Commons majority has given Cameron has enabled him to get the renegotiation off to a smoother start than expected. The hard part will come when he has to move beyond talking, to setting out what will change. It is then that he will need all the authority he can muster to keep his party from splitting.


Got something to add? Join the discussion and comment below.

You might disagree with half of it, but you’ll enjoy reading all of it. Try your first 10 weeks for just $10

Show comments
  • Atticus

    I realised some time ago that the UK is holding all the cards in this game. We have one massive point of leverage, and that is the Republic of Ireland.

    If, following our EU exit, the EU should choose to punish us (contrary to the ‘Preferred Trading Partner’ status that we would have under WTO rules), with trade restrictions then this would hurt all parties involved, but would absolutely cripple the Republic of Ireland which relies on the vast majority of its trade with the UK.

    The UK can leave the EU and still have a premium trading deal with all EU members, because any other option would result in the Republic of Ireland turning into the next Greece.

    It is time to leave the EU and reap the rewards.

    • Hamburger

      I think your dest argument is your money.

    • NMS

      There is of course no such place as the Republic of Ireland. Ireland is a republic. While the UK is Ireland’s largest trading partner, it does not carry out the majority of its trading with the UK. Indeed, the Uk has a positive trade balance with Ireland, and is I think the UK’s third most important trading partner. The UK exports to Ireland may be exaggerated due to entrepot activity at some UK ports. Any likely problems would cut both ways,

      I will leave you and the 13 people who upvoted you alone in your happy ignorant bliss.

  • sallyelizabeth

    Cammeron is trying to negotiate by showing his hand before he asks for any repatriation of powers!
    He has told the EU he will never take the UK out of the EU, how stupid trying to deal with corrupt EU politicians when you have shown your hand before talking!
    A child could have done better than that! It’s all bluff,Cammeron is weak and Merkel is in charge of him!

    • Dan Grover

      I think you’re overstating the importance of the negotiation process between the leaders – the reality is that there is going to be a referendum, so whilst Merkel et al can play hard ball all she likes with Cameron, it’s the British people that are ultimately going to decide. The real “negotiation” will be in who can convince the other what the British people will want, because neither side actually wants the UK to leave (otherwise why negotiate?)

  • MA0

    This article is very hard to relate to reality. I have come to the conclusion that the author knows he is lying.

  • UnionJihack

    Renegotiation is not going to be a delicate task and nothing has changed after this week has gone by.

    Both the Finnish PM and the French President summed up the scenario nicely a week ago. The French bloke said: Britain, sort yourselves out and bring it on, then we talk (he is right), the Finnish chap outlined what is and what isn’t up for discussion (he is also right). And let us be clear about one thing, Germany will take full advantage of Britain’s desire to renegotiate.

    • Hamburger

      France is terrified of any change in the treaty because they would have to put it to a referendum and will do their best to delay any decision. I am afraid we ill follow as Frau Merkel’s political method is to bury her head in the sand as long as possible.

  • Lady Magdalene

    Just imagine Cameron to be shorter, tubbier, northern accent, older and smoking a pipe …. and you will have a clear picture of his strategy.

  • WarriorPrincess111111

    Like a great majority of the public – I am concerned that if we remain in the EU, we are on our way to complete destruction. Those who are leaders of the EU do not appear to have the wisdom to be in the positions that they hold, and are incapable of realising a dream that was impossible from the outset.
    The United States of America had a common base, the United States of Soviet Russia, had a common base – the United States of Europe does not. One group of people acting as a Senate, has been attempting to compound one nation from twenty eight different nations + more, each of those nations having traditions, language and history completely different from each other, and whose financial status revolves around each of their natural resources.
    For what purpose? It has not been to improve the living standards of the people. It has been in existence for more than fifty years, lifestyles have deteriorated hugely. It has not improved the status of any member country, each has declined severely while in the EU. It has not been to improve the trading of each of the members for almost every member trades outside of the EU.
    A few people have greatly increased their wealth – and a few hundred thousand are employed in Administrative work in Brussels. Is that it?
    In all honesty, the EU is becoming an embarrassment! It issues ill thought out policies and then issues follow up policies in an attempt to correct earlier ones. The latest is to increase the taxes on member countries. In the UK, small companies will be forced with their backs to the wall and unemployment will rise, yet again!

  • Malcolm Stevas

    “[Cameron’s] limited strategy for the renegotiation is becoming clearer”
    It always has been clear. The major EU leaders have with absolute consistency rejected the starry-eyed suggestions of Cameron and his followers that “renegotiation” to a significant degree was on the cards. If he were to manage to pull it off, against the odds, then he would deserve respect. Trouble is, many of us are still to be convinced that he really & truly wants major renegotiation of our EU relationship and thinks it feasible.

  • Frank

    Dave is doing the dance of the seven veils, always tricky trying to pretend that you are doing an arduous negotiation when you are actually so comfortable at the big european table!

  • G B

    ‘An opt out from ever closer union’. This, if agreed, will welcome in just that in the usual underhand EU way, so no we should not fall for that one.
    Cameron should ‘start’ with the repatriation of those 43 powers of control (governance) that he gave away last November. Opt out of ever closer union means nothing as they have all that they need other than control of our financial institutions and the setting of tax rates. They might be prepared to negotiate on what is left of our independence but I sincerely hope it will not be sufficient for our Eurosceptic MPs.
    The British people are kept in ignorance in respect to the globalisation agenda and how this will impact their lives. The legal protections we have enjoyed as a country are being stripped away and replaced by EU legislation that puts the rights of the state above those of the individual. These freedoms are under attack as never before and the British need to be woken up to the ramifications. It needs to be explained that this is much more than the EU telling us what type of vacuum cleaner or kettle we can buy.