THE UK REFERENDUM ON EU IS ON

A key part of the Tory platform was the promise of an EU referendum by 2017. It was vital to winning back disaffected Conservatives who had embraced Ukip, and it played a big role in the “don’t waste your vote” campaign in the final days of the election. It turned out to be a smart move: euroscepticism has been growing in Britain since the Crash and the fast decline of the Eurozone and there’s a feeling out there that the relationship between Westminster and Brussels needs to be renegotiated. The issue isn’t just related to who writes what laws – the bête noire of the Right that is flung around with varying degrees of accuracy. Indeed, people may not have consciously, explicitly voted with Europe in mind. But Ukip has helped to tie Europe closer to immigration in people's minds by making the case that membership of the EU is responsible for mass migration – along with crowded hospitals, anarchic schools, falling wages, declining blue collar employment. In other words, the commitment to hold an EU referendum represents in the minds of many voters the chance to “get the country back” in the broadest possible sense. It is one of the biggest and most important battles in the culture war.

The referendum on the UK’s membership of the European Union will take place by the end of 2017 and the prospect will now dominate debate in the business world until polling day.

Not every business leader wants the UK to stay in the EU, but it’s reasonably clear that most do. In the City and financial establishment, opinion is even more one-sided in favour of membership. Expect to see a full-throttle lobbying campaign, accompanied by dire warnings that investment in the UK is at risk and that the City’s status as a global financial centre is under threat.

Possibly. In practice, one suspects Cameron’s stunning general election victory strengthens his hand in keeping the UK in the EU – which one assumes will be the position he eventually adopts. First, his personal authority is strengthened, so he ought to be less vulnerable to attacks from the Eurosceptic wing of the Conservative party. Second, one clear message from the election results is that the Tories’ appeal to economic competence was heard. The pro-EU lobby starts with a huge advantage if it can equate economic stability with membership. Third, while one in eight votes backed Ukip, the party may not be led by charismatic Nigel Farage, previously assumed to be its best electoral asset. Fourth, the SNP – the other big winner in the election is a pro-EU party.

According to Cameron’s script for the referendum, he must first conduct a tour of European capitals to renegotiate the UK’s relationship with the EU. This adventure could yield nothing, it is true. But other EU leaders must now accept that a UK referendum is a reality, not a vague possibility, which changes the rules of engagement.

A full EU treaty change feels highly unlikely, but one suspects Cameron will be able to pluck a few concessions from the negotiations on immigration rules or voting rights and present them to UK voters as a triumph of negotiation, even if the boast is thin. And if Greece were to exit the euro, Cameron’s chances might be boosted further: the great European project will be in terrible shape if the euro has lost a member, and the EU itself is in danger of losing it second-largest economy.

It is safe to assume that the frontbenches of all three major parliamentary parties: Tories, Labour and SNP will be arguing for continued membership. The Eurosceptics on the Tory backbenches can make life awkward for Cameron but he still holds the strongest card  the appeal to economic stability.

EU Position

The EU is ready to work with Britain's re-elected Prime Minister David Cameron on his reform demands but key principles including the freedom of movement are not up for negotiation. The European Commission stands ready to work constructively with the new British government. The EC has opened the door for "minor" treaty changes but rule out any altering of the four key treaty principles of free movement of goods, services, capital and people. The EC first wants to see and receive the UK proposals on reform, and of course in the spirit of openness, friendliness and constructive spirit is ready to discuss those in its quest for a fair deal with Britain. Treaty change is something that is not that easy but it's also part of a longer-term perspective of how the European Union is organised.