Brexit – Keep Calm and Find a Deal

Brussels –the city of deals, and it will need the mother of all deals to prevent the UK drifting off into the mid-Atlantic and leaving the EU. The Brexit question is firmly centre stage following David Cameron’s surprise election victory and the question is no longer if but when. Cameron has pledged an in-out referendum by 2017 and there may well be pressures to bring this forward to 2016 to avoid a long drawn out campaign which risks paralysing government for two years.

So the UK referendum campaign starts today and business must learn the lesson from the Scottish referendum and get involved now. The EU institutions must also learn from past mistakes if they want to keep the UK in and tighten up their communications. The ferocious British Eurosceptic press will pounce on any repeats of the poorly handled budget rebate fiasco from last year and the Commission will need to be much more media savvy to convince a sceptical public.

Back to the deal. Seeking compromise is what Brussels does day in, day out, and one only needs to look at how it has bent over backwards to help out a beleaguered French economy, to see what can be done if the political will is there. Jean-Claude Juncker and David Cameron may not the best of pals, but the former is an arch-pragmatist and he will know losing the UK would be disastrous for the EU project. Both Juncker and Cameron will also have an eye on the legacy issue. Neither will want to be remembered for the break-up of the Union and so the question is, what sort of deal can be done? Will David Cameron be more reasonable in his demands now that the spectre of a rampant UKIP taking Tory seats has been put to rest? European leaders will go out of their way to try and ensure Cameron can campaign for a yes vote in the referendum, but they have made clear where their red lines are. There will be no re-writing the Treaty on free movement of people and there will be no Treaty revisions before 2017, the 60th anniversary of the Treaty of Rome, when both France and Germany hold key elections.

A fascinating sideshow to the EU vote will be what is happening in Scotland. The staunchly pro-European SNP, led by Nicola Sturgeon, have made it clear that Scotland must not be taken out of the EU on the basis of English votes. A no vote would certainly hasten calls for another Scottish referendum and suddenly Scoxit is trending on twitter. Cameron has a major juggling act if he is to maintain a union with Europe and within the UK, but surely he would not want his legacy to be an isolated England. To avoid this, a non-committal response from business is not good enough, they need to get off the fence and for once convince the British public of the benefits of EU membership.

Author

Richard Steel

Senior Associate

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