Even though the prospective referendum on Britain’s membership of the EU is still over three years away, politicians and business representatives are already gearing up for the fight to come. At least that is the impression which any observer of Monday’s panel debate on ‘the City and the EU: better in or out?’ held at Fishmongers’ Hall in the City of London, would undoubtedly have left with. That is because, aside from the media excitement over Nigel Farage’s comments relating to the gender pay gap, Monday’s debate provided many insights into how the campaign on a potential ‘Brexit’ – UK withdrawal from the EU – in 2017 is likely to be fought.
In the company of over one hundred City executives, diplomats and business representatives, our four panellists set out their views on what is sure to be the most prominent economic and constitutional question for the UK since Britain’s accession to the then EEC in 1973. Nigel Farage’s fellow panellists: Chris Cummings (Chief Executive of TheCityUK); Dr Charles Tannock MEP (Conservative, London); and Peter Oborne (Chief Political Commentator, Daily Telegraph), all held forth on how they saw the City’s relationship with the UK’s Continental neighbours changing in the future. Based on how the hour-long debate unfolded, a number of observations can be drawn:
1) The City’s long-term relationship with the EU is not just an economic issue:
Both of the more Eurosceptic panellists, Nigel Farage and Peter Oborne, argued that the EU was out of sync not just with the economic needs of the City, but also with the Square Mile’s underlying culture and ethos. From Mr Farage’s dramatic claims that there was a “solid wall of hatred” against British financial interests in Europe, to Mr Oborne’s insistence that EU financial regulations were aimed at the City of London’s “jugular”, much of the discussion focused on the compatibility, or lack of it, between Anglo Saxon and Continental approaches to enterprise and financial innovation. Expect such points about the differences between Britain’s economic model, and those on the Continent, to intensify over the next few years, particularly if there is a need for further fiscal and political integration within the Eurozone.
2) Pro-Europeans and Eurosceptics alike want to claim the idea of Britain’s future as a global trading nation:
Whilst outbursts of internationalism are not what some people would normally associate with the Eurosceptic Right, Monday’s debate saw both sides keen to portray themselves as outward looking in terms of Britain’s long-term role in the world. Charles Tannock and Chris Cummings argued that the EU is a means through which Britain can extend its global trading network, through the negotiation of an EU-US trade deal for example. However, the more Eurosceptic side of the panel were keen to highlight what they saw as Britain’s flagging influence in organisations such as the World Trade Organisation, as the rationale for a closer focus on forging bilateral trade relationships with the faster-growing, particularly Asian, economies. For the City, which increasingly has to compete for business with alternative investment locations in Zurich and Singapore, for example, striking the balance between the benefits of opening new markets for trade and the downsides of EU regulatory harmonisation will be likely to remain near the top of the political agenda for some time to come.
3) UKIP is moving beyond just being an anti-EU party:
From Nigel Farage’s comments at Monday’s debate, it appears that UKIP is now well down the road from being a single issue, anti-EU party toward developing itself into an all-purpose, anti-establishment, none-of-the-above, alternative for voters who have become disillusioned with the larger parties. Part of this is inevitably down to Mr Farage’s seemingly unspun, straight forward demeanour, whilst UKIP has also undoubtedly benefited from the entry into Government of the Liberal Democrats, who, for two decades, were the usual beneficiaries of mid-term disaffection with the ruling classes. It appears probable that UKIP’s strong showing in current opinion polls will propel it to success at the European elections in May, inducing calls from Conservative MPs in marginal seats for a tougher approach to a renegotiation of Britain’s role in the EU.
4) Labour are now seen as key to securing an EU referendum in the next parliament
During Monday’s debate, Mr Farage said that “the really important role which (UKIP) could play, in terms of national politics” was whether, through a strong result at this year’s European elections, they could “push Labour towards promising a referendum” on Britain’s EU membership. Based on current opinion polls, a lot hinges on Labour’s attitude to an EU referendum between now and May 2015. If Ed Miliband continues to refuse to commit to an EU referendum, then the prospects for changing Britain’s, and the City’s, relationship with Brussels before 2020 look remote. If Labour moves towards a more Eurosceptic stance, however, then everything is back on the table and the possibility of the City having to survive outside the EU will continue to loom large in both UK political and business thinking.
So, where does the Europe debate go from here? Will Nigel Farage succeed in prompting a political earthquake in May, and what will the impact of a potential Brexit be on the Square Mile? Although we may not find out the definite answers to these questions for several years to come, one thing is for sure: the debate on the City’s relationship with the EU will rumble on.