Would the UK Benefit from Leaving the EU at the Next Proposed Referendum?

Table of Contents

Acknowledgements

Abstract

List of Figures

1. Introduction
1.1 General Introduction:
1.2 Objectives of this study:
1.3 Structure of the thesis:

2. Literature Review
2.1 Introduction
2.2 History of Referenda:
2.3 History of Opinion Polls:
2.4 Impact on the UK Economy of Leaving the EU:

3. Methodology
3.1 Introduction:
3.2 Data Source:
3.3 SWOT Analysis of the UK leaving the EU on businesses:

4. Findings
4.1 Results of the YouGov Poll:
4.2 Results of SWOT Analysis:

5. Conclusion
5.1 Summary:
5.2 Evaluation:
5.3 Future Work:

Bibliography

Acknowledgements

Firstly I would like express my gratitude to my supervisor, Alistair Jones. Without his encouragement and support at a time when I needed it most, this thesis may never have been completed.

I am grateful to everyone who has assisted me with my dissertation and reminded me to get back to work!

Abstract

One of the main political issues plaguing the UK at the moment is the potential referendum on the UK leaving the EU, this has been pushed by Eurosceptics on both Conservative backbenches and also shown through the large number of votes and support of the UK Independence Party (UKIP) at the general election in 2015. The purpose behind this study is to understand and evaluate the potential consequences of the United Kingdom (UK) leaving the European Union (EU) on the UK’s economic, political and social landscape. Cameron (2013) stated that: “If we left the European Union, it would be a one-way ticket, not a return. So we will have time for a proper, reasoned debate. At the end of that debate you, the British people, will decide.” This study will investigate the UK’s relationship and identity with Europe including past referenda and treaties to analyse the publics’ opinion on the issue while also concluding that the UK could gain some major benefits such as international trade and a control on immigration from leaving the EU but may lose out on the shaping of Europe, while potentially losing its gateway to Europe status for trade unless the UK’s position could be renegotiated to include continued free trade with Europe. This study is important to be conducted due to the significance of an impending referendum by 2016/17 and is thereby important to evaluate in a non-biased way a guidance for the public to make up their mind.

List of Figures

Figure 1 Ipsos MORI Opinion Polls between 1997 and 2014 – Page 14 Source: Duffy et al. (2014, p. 4)

Figure 2 Standard Eurobarometer 82 – Page 16 Source: Autumn (2014, p. 7)

Figure 3 YouGov Survey on people’s position on politics in Britain and also multiple questions over Britain’s position in the EU. Page 22 Source: https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/hjo2r80s3e/StephanResults_150608_Europe_W.pdf

Figure 4 HM Revenue & Customs Total Monthly UK Trade – Page 27 Source: https://www.uktradeinfo.com/Statistics/OverseasTradeStatistics/DocuDocum/April_15_Chart.pdf

1. Introduction

1.1 General Introduction:

The topic of discussion is the potential consequences of the United Kingdom leaving the EU and the impacts of these decisions on the political and economic aspect of the UK and making a balanced decision on whether the UK should consider this move and what options are available during this process.

The UK managed to join the then European Economic Community (EEC) under Edward Heath, leader of the Conservative party and Prime Minister, at the start of 1973 despite previous entry attempts being blocked by Charles De Gaulle. The UK confirmed their position in the EU through the EU referendum in 1975 in which the public chose to stay in the EU. The requirement of being in the EU is to agree to the “Four Freedoms” which were agreed upon in the Treaty of Rome in 1957 which includes; free movement of labour, free trade of goods, free movement of capital and free trade in services. This was the first step of a ‘common market’ which allowed for people living in Europe to migrate with no border controls, no tariffs on both goods, services and capital assets.

The UK’s push and agreement for the Single European Act in 1986 helped pave the way for the “Single Market” in 1993. This “Single Market” gave the UK access to a free market within Europe with no tariffs and gave customers more choice at competitive prices due to no protectionist policies. Access to the “Single Market”, allows businesses a huge customer base which according to the European Commission (2012, p. 7) was “Initially open to 345 million people in 1992, it can now be accessed by over 500 million people in 27 EU member states.” This was considered a huge benefit to UK businesses while also beneficial in allowing businesses outside of Europe to invest through FDI in countries within Europe such as the UK. An example of this is Nissan with its manufacturing branch in Sunderland in the UK. This is beneficial as it means Britain acts as a gateway for its cars to be sold into Europe, benefiting the UK economy particularly through employment and export-led growth and impacts the multiplier effect due to the supplied jobs. This leads to employees spending wages for goods and services which in turn causes other businesses to benefit and thereby hire staff and allow the growth of businesses, particularly in those affected regions of FDI. Despite certain positive involvement in the relationship within the EU, more recently the UK among a number of other EU members chose not to be part of the Eurozone by opting out at the Maastricht Treaty of 1992 which involved the introduction of the Euro currency in which Eurozone members lose the power of monetary policy which is removed from national governments and centralised to the European Central Bank. The UK separation from not joining the Eurozone has meant they are more independent and thereby rely on the EU less through controlling its own monetary policy while having its own ‘central bank’ named the Bank of England. The Bank of England was made independent of the UK government in 1997. This ensures the British pound sterling is being managed independently from the UK government and means the UK doesn’t use the Euro or abide by the European Central Bank’s ‘One size fits all’ monetary policy. It is worth mentioning that the UK’s interest rates are managed in the shadow of global economies such as large economic shocks from the EU and the USA, because of this, the UK has puts in place reactionary measure to global economic issues and ease the effects on the UK. This in turn means that the UK still has to manage its interest rates similarly to other large central banks in reaction to global economic issues. The recent economic crisis of 2008 caused by the collapse of major businesses in the banking sector such as Lehman Brothers and more locally in the UK; Northern Rock and Halifax and Bank of Scotland (HBOS) led to major economic woes in the EU. Economies in the EU spent large sums of money to try to dampen the effects of the 2008 recession but increasing borrowing rates lead to many large countries within the Eurozone, for example Greece and Ireland requiring financial aid as they couldn’t meet their debt obligations on top of having to nationalise certain failing banks. This financial struggle among other issues within the EU such as immigration and the costs associated with membership of the EU has led to opposition parties such as UKIP coming to prominence and Conservative backbenchers pushing for the UK to leave the EU.

The Alternative Vote referendum in the UK in 2011 and the 1975 Referendum on whether or not to stay in the EEC serves as good examples of recent referenda that should serve the basis of the public’s interest such as turnout and also the involvement of political parties and their influence over the public’s decisions with particular reference to the 2014 Scottish Independence referendum.

As mentioned previously, the main limitations of this study is that the referendum has not happened yet and all sources and opinions are conjecture as based on what could happen and not what has happened. Other limitations is the bias of certain sources, for example, information from EU sources and political parties are likely to be one sided. This is because their party and political opinions on issues such as the UK position within the EU will influence these particular sources that are likely to be stacked with their opinions. While it is impossible to remove all bias as everyone has their own opinions, a wide range of views and opinions will be used to make a balanced argument. This will be taken into account when constructing analysis in regards to the topic.

1.2 Objectives of this study:

This study has been conducted as it is necessary to analyse potential important impacts of the public’s decision on whether the UK stay or leave the EU including the possibilities and the impact of the decisions and the advantages and disadvantages of both decisions which will be analysed through a variety of methods including SWOT analysis. This allows the electorate to understand our current involvement with Europe and give them the appropriate information to allow them to make their own mind up on whether or not the UK should leave the EU while discussing alternative strategies on the UK’s inclusion within Europe. By investigating this study it shall be analysed to obtain the best possible solution for the UK and to thereby understand any potential negative political, economic and social externalities from the UK’s decision and how this could be controlled to maintain minimal fallout.

There have been multiple studies and research previously undertaken in regards to the UK leaving the EU that has already previously been created. Public research such as the Eurobarometer and Ipsos MORI will allow us to understand the public opinion of the UK involvement with the EU. In an expansion on research and data, previously gathered quantitative research information will be used including opinion polls. This is the best method, of research as the topic of leaving the EU is a national decision and opinion polls are likely to be the most accurate. Any primary research conducted through my own surveys would not be accurate due to the fact that it would only be gaining information relative to my own local area with limited funding and demographics, thereby current research and opinion polls is a necessity to increase accuracy and analysis as discussed in regards with the Eurobarometer and Ipsos MORI. Quantitative research is the best research method due to the fact that the referendum has not occurred yet so it is difficult to foresee accurately what the implications of leaving or staying in the EU are on the UK, thereby this study will help inform the public in understanding the consequences of each decision. Qualitative research methods such as interviews are hard to be conducted among a large enough sample due to it being very time consuming and costly. It is therefore difficult to accurately predict public opinion on the issue of the UK leaving the EU.

The main issue with many studies and sources in regards to this topic of the impacts of leaving or staying in the EU is that the situation has not happened, so all sources are essentially conjecture. Public opinion, however, will still be analysed to understand the current British publics’ views. This needs to be taken into account in regards to this study in that we cannot completely predict the outcome of leaving the EU or staying in. While there are other examples that give us an idea into the implications such as Greenland, who left the EEC in 1985, this obviously has limitations due to how long ago this was and also because it is different in regards to the current constraints on the environment within Europe.

1.3 Structure of the thesis:

This study is split into 3 chapters. The first chapter includes the introduction and gaining the history of Britain and the EU while also discussing the objectives of the study. The second chapter will expand on the literature and discussing the arguments between sources in regards to various major issues including previous referenda, opinion polls and also the economic benefits and limitations. The third chapter discusses the methodology including the data gathered including from polls and also SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. The findings of this research will also be discussed in this chapter. Finally the bibliography is included at the end.

In regards to this study throughout all chapters, my hypothesis will be expanded on. The hypothesis of this study is “If the United Kingdom left the European Union and became a separate entity, the United Kingdom would greatly benefit”. This hypothesis will be tested thoroughly throughout the study.

2. Literature Review

2.1 Introduction

This chapter will consist of secondary data and other literature that is accessible and previously exists and will be used to test the hypothesis key question of “If the United Kingdom left the European Union and became a separate entity, the United Kingdom would greatly benefit”. This chapter will start discussing the various secondary sources and critically analyse them to understand the strengths and weaknesses of particular sources and their usefulness in regards to the hypothesis. The areas of study to be analysed include historical decisions in terms of past referenda, previous opinion polls and the impact on the UK of leaving the EU primarily on the economy.

2.2 History of Referenda:

The historical aspect of previous referenda in the past in the UK is a great place to start in understanding the EU referendum in the act of public support and also political involvement in what could happen. It also serves in understanding the reasons for a referendum but also the history of the UK’s relationship with the EU and how that relates to whether the UK would benefit from leaving the EU.

In regards to the 1975 referendum and understanding previous support for the UK being in the EU; Butler and Kitzinger (1976, p. 280) state “Yet the verdict of the referendum must be kept in perspective. It was unequivocal but it was also unenthusiastic. Support for membership was wide but it didn’t run deep.” This emphasises that although the 1975 referendum resulted in Britain staying in the EU, the support for it involved a large number of people although they were quite wary of the EEC and few were complete ‘europhiles’. Gibbins (2014, p. 175) similarly argues in regards to the 1975 EU Referendum that “It is important to highlight the fact that the vote for Britain to continue the membership of the European Community, although much flaunted as a radical and unprecedented act, was more about the politics of fear that blighted a 1970s recession-hit Britain, rather than an intrinsic desire for political change.” This expands on the fact that Britain was scared of change at a time when the economy was struggling and that fear meant they did not want major risky change by leaving the EU. Pilkington (2000, p.54) also agree through discussing: “Once in the EU, they distrust change and would hate the disruption that would be caused in attempting to leave. These are the people who, in the UK, voted to remain in Europe in the 1975 referendum and would probably vote the same way today.” The authors goes on to analyse that there are a variety of groups in regards to opinions on Europe, but they describe the majority that voted to stay in the EU in 1975 as “Euro-progressives or Euro-positives”. Montgomerie (2015, p.27) argues: “If the British people had known what the EEC would become, the result of Harold Wilson’s 1975 referendum might have been very different.” He continues stating: “In the 1970s we were, famously, a nation resigned to “managing decline”… Some hoped that membership of the European project would solve our problems.” This is a strong argument supporting the argument of Gibbins in that the economic woes might be solved by remaining in the EU hence the lack of support for leaving the EU in the 1975 referendum. Montgomerie is arguably a reasonably one sided columnist for ‘The Times’, a strongly regarded right wing newspaper under its tycoon owner Rupert Murdoch, because of this, it is less likely to be sympathetic with the lefts’ position on leaving the EU. Johnson (2015) on the other hand argues the lefts’ opposite in that we need the EU to solve issues that: “in an age of increasing interdependence, isolating Britain will damage growth, jobs and prosperity.” This shows that although the public chose to remain in the EU due to the fear of the risks involved in leaving the EU, although, the reasons differ in which Montgomerie discusses this due to the UK being desperate due to decline while Johnson believes deciding to stay in the EU has meant the UK has benefited through ‘growth, jobs and prosperity’ and therefore should continue reaping the benefits.

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