Economic ResearchPublicationsResearch PapersEuropeThe UK within the EU

The UK within the EU

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Dr. Lorenz Weimann

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The UK’s ambivalence to other European countries, along with therefore the EU, has built up over many centuries, shaped by its distinctive island independence, wars, different economic interests and political ideologies. In the post WWII era, while the UK was keen for Europe to bind itself together into a United States of Europe, it made clear that it would remain independent. However, during the late 1950s and 1960s the UK changed its mind. It increasingly became apparent that the UK’s economic growth was lagging behind Germany and France, that the trade associations it was part of –  such as EFTA and the Commonwealth –  were not meeting expectations and its international influence – through the Suez Crisis, colonial independence and the Cold War – was on the wane. 

Allianz SE
Munich, Feb 06, 2013

So, in 1973, after a couple of failed attempts, it joined the European Economic Community. Since then, as the European Project has gathered momentum, the UK’s strategy has been to focus on developing free trade, EU enlargement, along with foreign and security policy. 

More recently in the wake of the euro crisis and plans to deepen EU integration, public opinion in the UK against the EU has risen and the United Kingdom Independence Party (UKIP), an anti-EU party, has gained in opinion polls. Although ironically, according to other polls, the EU does not feature in a list of issues that UK voters consider important, those that are mostly relate to the poor state of the UK economy. Nevertheless, with his eye on the 2015 General Election and ambition to win an overall Conservative majority, David Cameron believed that he had to do something significant on the UK’s relationship with the EU to win back votes from UKIP and deflect damaging criticism of his leadership from right-wingers in his own party.  In a speech delivered on 23 January, he therefore set out his strategy to achieve this, which will be to negotiate “a better deal” for the UK’s membership of the EU and put this to a referendum after the 2015 election, possibly in 2017. 

This paper examines the challenges and options faced by the EU in order to keep the UK on board. How can Europe ensure that it has the flexibility to accommodate members such as the UK who do not wish to partake in enhanced integration – but are still a pivotal element of the EU construct – without unraveling the whole edifice? Can this circle be squared?

A UK departure from the EU would be a lose-lose situation for all. As a global financial services provider, with a keen interest in open and fair markets, it is in the interest of Allianz that this does not happen.