United Kingdom – EU Vote May Test Tory Unity
Prime Minister David Cameron’s center-right Conservative Party was strengthened at the last general election in May 2015, when it gained a 12-seat majority that all but ensures that the current government will remain in power until the expiration of its five-year mandate in 2020. No longer constrained by dependence on a coalition partner, the Conservative government has pursued a characteristically business-friendly and fiscally conservative policy agenda.
That said, Cameron’s government had been forced to amend some of its plans in response to pressure from within the Conservative ranks, such as the elimination of tax credits for low-paid workers, which was criticized as creating a disincentive to find employment. Such disagreements are not of a magnitude that the might produce a lasting rift that threatens the government’s claim to a majority, and with the Labour Party struggling to maintain unity under the leadership of Jeremy Corbyn, an old-school socialist, Prime Minister Cameron will be able to focus his attention on working out the compromises required to appease critics within the Conservative ranks.
The one area where that might prove to be too challenging is the matter of the UK’s membership in the EU. A key plank of the Conservatives’ election platform was a pledge to hold a referendum on continued participation in the EU before the end of 2017. The prime minster favors remaining in the EU, a position that until recently seemed to be shared by a majority of the electorate.
However, with the European refugee crisis focusing attention on the obligations, rather than the benefits, attached to membership in the EU, the probability that a referendum will result in the UK’s withdrawal is rising, and the possibility that the issue could trigger some defections by Conservative lawmakers cannot be ruled out.
Many fear that a so-called “Brexit” scenario would be disastrous for businesses operating in the UK, but the issue is not nearly that cut-and-dried. The UK could conceivably enjoy many of the benefits of EU membership by joining an alternative grouping, such as EFTA, while also reducing its financial obligations and gaining greater control over key areas of economic policy. Moreover, Britain’s departure from the EU would enable the government to pursue bilateral agreements with trade partners outside the EU.
In terms of the political risk, perhaps the bigger danger for Cameron is the likelihood that a vote to exit the EU would almost certainly prompt calls for another status referendum in Scotland. The plebiscite on Scottish independence held in September was defeated in large part owing to uncertainty about what a “yes” vote would mean for Scotland’s relations with the EU. If that consideration were rendered moot by the UK’s separation from the EU, the chances of a victory for the “yes” camp would increase significantly.Back to Insights