With the British government facing fresh demands for a referendum on the country’s EU membership, Open Europe argues in a new 50-page report that Britain should remain in the EU
Backbenchers in Prime Minister David Cameron's Tory party have stepped up calls to renegotiate the UK's relationship with Europe in recent days, while one MP preparing legislation that could see the country withdraw from the EU altogether.
But Open Europe dismissed those calls, saying that "leaving the EU would raise more questions than answers." What Britain needs is a new set of membership terms, but certainly not leaving the EU, the report argues.
Alternatives to EU membership - along the lines of Norway, Switzerland or Turkey - would all come with major economic drawbacks, especially for key businesses such as car manufacturers and financial services, the Open Europe analysts argue.
The Norway-type of relationship with the EU, which is the closest next to full accession, is seen as even more detrimental that the one with Switzerland or with Turkey. Turkey is a candidate country but its prospects for joining the EU remain uncertain.
Consequently, Open Europe advocates that the UK remain a full member of the EU customs union and single market in goods and services – allowing it to remain at the heart of European cross-border trade - but substantially reducing the non-trade EU involvement and costs whenever possible, including bringing powers back to the UK.
No clear-cut or easy option
Open Europe Director Mats Persson said there was no clear-cut or easy option for the UK outside the EU.
“If Britain chose to leave tomorrow, it would raise more questions than answers, and contrary to popular belief, still require complex negotiations with and approval from other European governments,” he said.
Persson argued that “it is in the UK’s interests to stay in the EU but renegotiate a new model for membership founded on a continued commitment to EU-wide trade but substantially less EU involvement in other areas.”
The report analysed the pros and cons of four options to reform the UK's relationship to the EU but said none are suitable.
- The ‘Norwegian model’ would free the UK from the Common Agricultural Policy (CAP), EU fishing rules, EU-wide regional policy and reduce its budget contribution. However, while guaranteeing access to the Single Market in services and goods, outside the customs union, access for goods would be subject to complex rules of origin and Britain would still be subject to EU regulations on employment and financial services but with no formal ability to shape them.
- The ‘Swiss model’, or free trade agreement: The Swiss-EU bilateral deal, without the CAP, EU fishing rules, EU-wide regional policy, and reduced financial contribution, offers more sovereignty and less EU regulation. However, the UK’s access to the Single Market would be dependent on the deal it could negotiate with the EU – the Swiss deal currently excludes the vast majority of services, including financial services.
- The ‘Turkey+ model’: The UK would continue to benefit from full access to the EU’s Single Market in goods by remaining in customs union with the EU, but Britain would be bound by any external deals that the EU strikes in trade in goods without any formal way of shaping them. A separate deal on services would be required to maintain UK access to the Single Market in these sectors. It would be free from EU social and employment regulation, the CAP, CFP and EU-wide regional policy.
- The ‘full break’: If the UK left the EU without securing a version of the above options, the country could fall back on its World Trade Organisation membership. This would see some exports facing relatively high tariffs (i.e. 10% on car exports) and market access for services would be limited.