Yes minister, Britain wants to stay

FT.com

On a recent visit to Washington, a top British diplomat began his presentation to American colleagues by assuring them that there is no way that Britain will leave the EU. His declaration had the opposite of the intended effect. "Until that,” said one of the Americans present, "it had never occurred to us that Britain would leave. Now we're really worried.”

In fact, everybody should calm down. The threat of Britain actually quitting the EU remains small. The current atmosphere of crisis is real enough. But once you start thinking through the likely chain of events, continued British membership of the EU remains easily the most probable outcome.

The present uncertainty stems from a mixture of interconnected developments on both sides of the channel. The eurozone crisis has forced EU members to contemplate a much deeper merger – including steps such as a banking union. Britain's insistence on simultaneously opting out of new forms of integration while demanding safeguards for UK interests from the sidelines, irritates its EU partners. Every time Britain opts out of something, it also underlines the country's increasingly semi-detached relationship with the EU – raising the question of whether such an arrangement can be permanent or sustainable.

Internal political developments in Britain are also ratcheting up the pressure. Many Conservative members of parliament formed their worldview during the 1990s, when the party was tearing itself apart over the prospect of European monetary union.

They are now coming to political maturity (if that is the word), at a time when the eurozone crisis seems to vindicate their deepest concerns and convictions. The large europhobic faction within the party has already inflicted defeats on the government by rebelling on European questions – and is constantly pressing David Cameron, the prime minister, to take a harder line.

Even those Tory MPs who are not hugely moved by European issues are very concerned by the rise of Nigel Farage's United Kingdom Independence party, which advocates British withdrawal from the EU and threatens the Tory hold on many parliamentary seats. Until the Liberal Democrats joined the coalition government, they were the natural home for protest voters. But with the Lib Dems now part of the establishment, their support is collapsing. The UK Independence Party has become the "none of the above” option – and its rise is putting further pressure on the British government to take dangerously hardline positions in Brussels.

Put all these factors together and the forces pushing for an eventual British exit from the EU can look formidable. It cannot be denied that the potential exists for a crisis to develop which could push Britain out of the union.

Yet the ties that bind Britain into the EU still look more powerful. The most important point is that neither the British government – nor the leading European governments (with the possible exception of France) – actually want Britain to leave the union. If it happened, it would be by accident rather than design.

Cameron has been promising a big speech on Europe for months. But his strategy for keeping the UK inside the EU is fairly clear. He is likely to demand a renegotiation of Britain's terms of membership, involving the repatriation of some powers from Brussels. He will promise to put the result to a referendum, in which voters will be invited to accept the new deal or quit the EU.

The other EU members will not make a British renegotiation easy. But they will probably throw a few token concessions in Cameron's direction, rather than force Britain out of the union.

Then, everything will depend on a British referendum on the new deal. At present the prospects for a Yes vote look superficially unpromising – a majority of British voters tell pollsters they would like to leave the EU.

But the actual vote, after a referendum campaign, would probably be very different. The leaders of all three leading parties – the Tories, Labour and the Lib Dems – would campaign in favour of a Yes vote. Ranged against them would be Ukip, a party that Cameron uncharitably – but not entirely inaccurately – in 2006 described as made up of "fruitcakes, loonies and closet racists”. The No campaign would be bolstered by some of the angrier and less attractive members of the Conservative party. Faced by this line-up, the British public would almost certainly opt for the status quo – staying inside the EU.

The whole process would strongly resemble the last British referendum on the EU in 1975. Back then, the Labour government led by Harold Wilson had also insisted on "renegotiating” Britain's terms of membership – and putting the results to a referendum. All of the most trusted figures in British politics (including Margaret Thatcher) campaigned for a Yes vote. In the end, more than two-thirds of the public ultimately voted for continued membership.

The British public has become less deferential over the past 40 years and the EU has been transformed in size and purpose. A lot has changed since the last British referendum on Europe in 1975. But the end result is likely to be the same.

Copyright The Financial Times Limited 2013.