A Brixit looms

By Bagehot

MY PRINT column this week considers the political implications in Britain of the deepening euro crisis:

DAVID CAMERON does not want Britain to leave the European Union, though he finds it exasperating and fears euro-zone meltdown could cost him re-election. His Liberal Democrat coalition partner, Nick Clegg, is a pro-European. Nor does the Labour opposition leader, Ed Miliband, want out. Mr Miliband is a European social democrat by instinct (his relatives were refugees from the Holocaust) and by judgment, seeing the EU as a way of delivering public goods such as action on climate change.

Yet the chances of Britain leaving the EU in the next few years are higher than they have ever been. A Brixit looms for several reasons. For one thing, the British never fell in love with Europe, instead weighing costs against economic benefits. Right now the EU is seen as a basket case (though British finances are hardly in great shape).

For another, if euro-zone members overcome their differences and integrate much more deeply, they would arguably be leaving Britain, especially if their integration fragments the single market that is the bedrock of British membership. Mr Cameron and his chancellor of the exchequer, George Osborne, may talk of the euro's “remorseless logic” compelling richer members to stand behind the weak. But there are paths of European integration down which no government led by Mr Cameron (or for that matter Mr Miliband) could follow. At the top of the Conservative and Labour parties, economic debate is dominated by those who saw the euro as a disaster and think they are being proved right. The public agrees, though their certainty has less to do with economics than misanthropy: the British do not like southern Europeans enough to offer them a subsidy union, and have never believed that other rich northerners, deep down, felt differently.

British politicians can be forgiven a degree of passivity, then. Yet if Britain is closer to the exits than before, politicians do bear the blame in one important way. A worrying number of MPs seem to believe that—as a happy result of this crisis—Britain can blackmail its way to more favourable terms of membership.

As Conservative Party leader in 1998, the current foreign secretary William Hague predicted that the single currency would turn into a “burning building with no exits” (in a speech mostly written by a young aide called George Osborne, as it happens). Now that the euro is ablaze, some Tory Eurosceptics want to park in front of the fire station, blocking treaty changes aimed at shoring up the currency unless the EU returns swathes of powers to British control. Their vehicle for such blackmail would be a “referendum lock” that became British law last year, guaranteeing a national vote on any future transfer of powers from Westminster to Brussels. Technically, euro-zone rescue plans could be crafted to avoid transfers of sovereignty from Britain. But some Tories, including—it is reported—some cabinet ministers, have told Mr Cameron that deep euro-zone integration would so alter Britain's relations with Europe that a referendum should be held anyway.

Tory leaders think they can win that argument. In parallel they also think that they can fend off calls from other Eurosceptics for a straight in-out referendum, calling such a vote the wrong question at a time of rapid change to Europe's structures.

Such arguments are relatively easy to win. Most Tory MPs do not favour outright withdrawal. They want a looser relationship with Europe, involving single-market membership without the bits they dislike such as environmental and employment rules, or big budget contributions. Most Tory MPs also realise that a block-the-fire-station blackmail strategy, unleashed at the height of a global economic crisis, is risky.

Instead, a supposedly safer wheeze is generating enthusiasm: to head into the next general election promising a formal renegotiation of British ties with Europe, with the results to be put to a “validating referendum”. The problem is that a negotiate-then-validate strategy is just a prettified form of blackmail. It amounts to a bet that other EU members will grant big concessions, knowing that otherwise British voters would reject the deal.

Nobody is going to pay Britain to stay

Germany—seen by Mr Cameron as the dominant force in a fast-changing Europe—has clearly signalled that Chancellor Angela Merkel will not be blackmailed into British opt-outs or special treatment. Germany accepts that in the event of treaty changes to create new euro-zone institutions, Mr Cameron would need concessions to get such changes endorsed by Parliament. Perhaps certain narrow powers could return to the national level for all EU members, Britain has been told. But push too hard and euro-zone integration will be pursued outside EU structures.

Germany may be bluffing a bit, but not wholly. Nor is it easy to see why MPs think a referendum to validate new terms of membership is safer than an in-out vote. Draw a map of possible outcomes, and to avoid defeat the future government would need to secure a renegotiation, win hefty concessions, convince the public that they were hefty and then persuade voters to answer the question on the ballot paper rather than generally vent spleen. A single wrong turn would lead to the EU exits.

Yet within Parliament and Whitehall, a startling number of senior figures think that one of the big parties will pledge an EU referendum before the next general election, forcing the others to follow. Labour, it is said, might call a referendum to split the Tory Party. The Conservatives might call one to shore up their core vote. Both might be bounced by rising support for the United Kingdom Independence Party, which favours withdrawal.

None of the party leaders want to leave the EU, but it could happen. All have much to lose from an EU referendum, yet such a vote is starting to feel almost inevitable. How this ends is unknowable, and only partly in Britain's hands.