Why the Brexit debate matters for us

In a major speech earlier this month Britain’s Chancellor of the Exchequer, George Osborne, launched an excoriating attack on the European Union — lambasting everything from its extensive welfare system and labour market to its regulatory systems, treaties and its existing plans for reform.

“We can’t go on like this,” he declared, suggesting that should reform not take place, Britain would consider leaving the Union and, instead, consider cooperating with a smaller group of member states.

From being the preserve of the right-wing awkward squad, the question of a “Brexit” as it’s come to be known, has entered the mainstream political debate, in a country that has always had an ambivalent relationship with the region.

It was just last year that Prime Minister David Cameron promised to hold a referendum on British membership of the Union if his party were to re-elected to government in the next election.

At the same time, he pledged to fight “heart and soul” to win the “yes (for EU)” campaign.

This gamble, he hoped, would assuage the anti-Euro camp within his party, and, more significantly, halt the meteoric rise of the anti-Europe, anti-immigration UK Independence Party.

A poll conducted over the weekend for TheIndependent on Sunday newspaper found that 27 per cent of voters favoured UKIP, against 26 per cent for the opposition Labour Party, and 25 per cent for the Conservatives.

However, the government’s referendum pledge has simply oxygenated the Euro-sceptic campaign, both within and outside the Conservative Party.

Last week, just under a third of Conservative MPs signed a letter calling for Parliament to be given a veto over European legislation, both current and forthcoming. Separately, a Bill is currently working its way through Parliament to set the legal grounding for a referendum on the issue in 2017.

And it is becoming increasingly unclear what the verdict of any referendum would be.

Recent polls have pointed to a clear Euro-sceptic shift, while one conducted over the weekend for the Observer newspaper found that a slim majority of Britons would support an EU exit if given a vote at the moment, with just over a third wanting to stay in.

The mainstreaming of the EU in-or-out debate should be of increasing interest to India, which continues to negotiate with the Union over an extensive free trade agreement.

An exit could prove particularly injurious to the substantial investments that Indian businesses have made in the UK, particularly those with significant export businesses oriented towards

Europe, such as the Jaguar Land Rover. Around 54 per cent of Britain’s goods trade is with the EU. Britain’s membership of the EU has boosted its goods trade by around 30 per cent, estimates the Centre for European Reform, a think tank which warns that Britain’s attractiveness for FDI could be threatened by a Brexit. Britain’s Foreign and Commonwealth Office estimates that around 700 of the 1,200 Indian companies in Europe have their European headquarters in Britain, often treating the country as its gateway to Europe.

The free movement of workers within the region has also given companies access to a wider pool of talent. While not going as far as Nissan, whose CEO warned last year that the company would “reconsider” its UK strategy and investments should Britain leave the EU, the car maker has expressed its concern on a couple of occasions at the turn of the debate on Europe.

According to the Financial Times , the auto sector is set to become one of the most outspoken critics of the anti-Europe campaign, publishing a report later this year setting out its case for EU membership.

“Our concern is that the uncertainty [over the future of European membership] could have a chilling effect on companies’ business decision and there could be a loss of confidence.

In the long term it could mean that the UK will struggle to generate the trade and GDP growth rate we need,” says Adam Nathan, deputy director of British Influence, a pro-Europe, pro-reform campaign group.

Even those Indian firms in the UK less dependent on European exports would be impacted, given the sizable economic boost Britain gets from EU membership.

However, there are other less tangible reasons for India to take heed. For the debate has to be seen in the context of the wider rightward leap forward in politics.

Public perceptions about the EU have become muddled over a whole range of issues — from the perceived inequity of the bailouts received by member states such as Greece at the height of the financial crisis, the strong leadership position adopted by Germany in tackling the crisis, and the growing feeling that EU citizens are coming to the UK in search of the scarcer welfare benefits on offer.

This last fear ratcheted up at the start of the year, after temporary restrictions on the rights of citizens of Romania and Bulgaria to work across the EU were lifted in a number of countries including the UK and Germany. “Flights and buses full as Romanians and Bulgarians head for the UK,” was the hysterical headline in the Daily Mirror (Romania’s ambassador to the UK estimated that a mere 30 citizens of his country had moved to the UK since January 1). The British government, in its turn, has begun clamping down on benefits available to EU citizens.

What this has amounted to is a wider increasingly hostile attitude towards immigration, both from within and outside the EU.

The debacle over the visa bond for several Commonwealth countries including India — plans for which were dropped late last year — must be seen in that context. This matters not just to visiting Indians and businesses, but also to Britain’s sizable Indian-origin community, of whom there are an estimated 1.5 to 2 million. To many who have spent decades contributing to the British economy and community life, the prospect of having to stump up £3,000 for a visiting relative’s visa bond was particularly distressing and humiliating.

Britain is certainly not the first European country to consider its position in Europe: France, the Netherlands and Spain have held referendums on a EU constitution. Nevertheless the recent turn of the debate — and particularly the questioning of free movement, working rights and benefits — has attracted criticism from senior officials in Brussels, who have warned that it could leave Britain increasingly isolated.

And therein lies perhaps the most significant problem with the tone of the debate in Britain.

Having that debate as a clearly committed member of the club is quite a different thing from to being the awkward member, threatening an exit if things don’t go their way.