Are EU In or Out? – Part 2: A Brief History of Brexit

Are EU In or Out? – Part 1: What is The EU? can be read here.

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A Brief History of Brexit

It’s fair to say that the UK has never been as fully engaged with the European project as, say, our neighbours in France and Germany. The country wasn’t an initial signatory of the 1957 Treaty of Rome which formed the European Economic Community (EEC). The UK hadn’t initially wanted to engage, citing reasons such as the economic turmoil of WWII, the transition of the UK from Global Empire to secondary power to the USA and the transition of the Commonwealth from a network of colonies and dependencies to a family of fully independent nations in their own right which had led to the UK being rather distracted from affairs on the continent.

The aftermath of the Suez Crisis, though, convinced many that the UK could no longer act as a unilateral power and views began to shift towards co-operation. Entry as a founding member was twice blocked by the veto of French President Charles de Gaulle (whose post-war relationship with the UK was infamously frosty).

It’s worth noting that through this period, the comparatively high per capita spend in post-war UK from the European Recovery Program (the “Marshall Plan”) compared to the countries of the continent linked into the UK’s pivotal position within the Bretton Woods currency management program (which together mandated freer trade between the European nations and the US) probably also served to shift the UK’s cultural focus rather away from the continent and rather more towards the USA.

As a kind of compromise, in 1960 the UK led efforts along with  Austria, Denmark, Norway, Portugal, Sweden and Switzerland to form an alternative, though complementary, network to the “Inner Six” (France, West Germany, Italy, Belgium, Luxembourg, and the Netherlands) of the EEC known as the European Free Trade Association (EFTA).

Come the early 1970’s, de Gaulle had departed and the objections from outside to the UK’s integration with Europe had departed with him allowing the UK to began again to petition the EEC ultimately joining in 1973. The decision was a fractious one, especially within the Labour party, and the February 1974 General election returned the minority Labour government under Harold Wilson based, in part, on the promise of a consultative referendum on the continued membership of the EEC. This promise was later strengthened to a promise of a binding referendum during the October 1974 General Election campaign which returned Labour with a narrow majority. The bill to hold such a referendum (the first in the modern era of UK politics and the only one to be held in the 20th century) was passed only with Tory support and the vote itself held on the 5th June 1975. With a turnout of 65% and a vote of 67% in favour of remaining within the EEC the course was set and the matter settled…for two years until the talks on the formation of the European Parliament and the formulation of the political integration which would become the EU…

The 1980’s brought in a change in UK political ideology, in the form of Thatcher’s Conservatives. Whilst the party of this era had supported the continuing membership of the EEC whilst in opposition and, indeed, was considered far less Eurosceptic than it is nowadays, the political direction with regard to Europe remained mixed. On one hand, the program of privatisation, the push towards indirect consumption taxes rather than indirect wealth and income tax greatly mirrored the movements in America under Reagan. On the other, the macroeconomic shocks of the mid 1980’s through the 1985 Plaza Accord and the 1987 Louvre Accord saw the UK switch the peg on the Pound’s exchange rate from the US Dollar to the West German Deutsche Mark which served to greatly stabilise the UK’s balance of trade with Europe (at the cost of increased volatility with regard to the US) at a time when European industry was increasing rapidly. The increasing employment opportunities in West Germany coupled with the catastrophic deindustrialisation of the UK was highlighted and typified at the time by the now classic comedy-drama Auf Wiedersehen, Pet which saw a group of British construction workers from various parts of England take advantage of the rapidly freeing of movement of labour throughout the EEC to find work in Germany.

Other satire of the time, such as Yes Minister, lampooned both the perception of increasing “meddling” of the EEC in the trade market as well as the UK’s own attempts to meddle back.

Thatcher’s era also saw a series of renegotiations of the UK’s terms of membership with the EU beginning with a topic at the front of the lips of many within euro circles to this day. The Rebate.

The Thatcher government felt that the UK had gotten a raw deal out of the Common Agricultural Policy negotiations. The UK was one of the richer members of the EEC and therefore one of the larger contributors to it but, unlike other nations, particularly France and Portugal, we had a disproportionately small agricultural sector meaning that, as a percentage of EEC expenditure, the UK got back in grants and development funds a fair bit less than it put in even as a proportional share. Thatcher (with a cry of “I want my money back”) therefore negotiated a cash rebate on our membership fee paid directly to Westminster coffers.

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This rebate was not without cost though. The rebate is paid for by an increase in the membership costs of the other EU nations (and we can imagine how we would feel about that if the situation were to be reversed) and has increased feeling among continental EU citizens (particularly in France and Germany although I have noted similar sentiment during my travels in Italy and Austria and even in Switzerland too) of Britain either getting “special treatment” or simply that Britain is insufficiently invested in the EU project.

Financially, the rebate has been rather less beneficial to some parts of the UK than to others. Whilst the UK as a whole is less agricultural than the EU average, Scotland is particularly devoted to agriculture (71% of Scotland’s land area is agricultural and we produce substantially above our 8% population “share” of UK agricultural produce (even despite the severe depopulation and underuse of the Highlands). Between the rebate and deliberate mismanagement of EU development funding by Westminster (including the diversion of funds specifically designated for Scottish farmers) Scotland receives some of the lowest levels of CAP payments per hectare in Europe. The rebate was also bought by the concession that Britain drop objections to the entry of Spain and Portugal into the Common Fisheries Policy, in line with the UK Government’s view that Scottish fisheries were “expendable“.

Come 1990 and the transition to the Major government and the UK got involved in the next struggle with European integration. Shifting macroeconomic focus further back towards Europe brought the agenda of formally joining the Exchange Rate Mechanism, a formal currency peg with, chiefly, the Deutsche Mark came back to the fore. This proved to be a disaster for the UK whose economy struggled to convergence to stability with the currency arrangements especially once the new tranche of financial speculators, born from and encouraged by a decade of Thatcher’s monetarist policies and infamously led by George Soros, saw an opening and began widely speculating on the pound. Despite throwing large amounts of public money into the stability mechanisms, the UK Government was unable to keep up with the speculators and the pound crashed out of the ERM on Black Wednesday in 1992. This cost the public purse some £2.4 billion and signaled the end of the ability for governments to exercise true control over the finances of an economy against the will of “The Market”.

(See especially from 40 min)

Whether or not this represented a fundamental failure of the structures of the ERM (or the Euro) itself (no other country has been crashed out of it in quite the same way although Greece appears to have only Pyrrhicly avoided it) it certainly poisoned the UK’s view of it although, almost perversely, our government’s view of the financial industry has continued rather more positively and both the official Remain and Leave campaigns have argued that their position would best help protect the City.

This would be best displayed five years later when Gordon Brown devised the “Five Economic Tests” which would need to be fulfilled before the UK considered joining the Euro. Joining criteria are important (again, looking at Greece there) and the euro itself has its own convergence criteria (which the UK currently fails to meet) but the Brown tests were set up less as a target to meet before joining the Euro and more as a barrier to excuse not even trying. Nevertheless, even if it could be shown that the UK would benefit as part of the euro, I rather doubt there would be the political and popular will to actually go forward with it.

The 2004 and 2007 enlargements of the EU provided the latest point of contention between the Union and the UK. These enlargements brought in many Eastern European nations and with them gave freedom of movement for many nations that were significantly poorer than the western nations. Immediately, whilst not vetoing the entry of these nations directly, the UK slapped many of them with temporary restrictions on those new member nations.

Anti-immigration sentiment, fueled by certain factions in the print media, is fairly on the rise even at the possible expense of a certain amount of cognitive dissonance among those who are quite proud of their own freedom to move around the EU.

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The run up to 2010 UK General Elections saw Nick Griffin and the BNP rise as the media’s pet anti-immigrant, anti-establishment, right-wing “alternative” though it was sharply checked by Griffin’s humiliation on the BBC’s Question Time. Casting for an alternative, alternative the media turned to Nigel Farage and UKIP and their disproportionate appearances in the media since then has undoubtedly played a part in their current rising tide.
(I would note, even as an objector to almost everything that they stand for, that UKIP as a party are far from the irrational xenophobia of all things unBritish as portrayed by the BNP. Indeed, until fairly recently they were full proponents of the idea of free movement of people. Just that it is to be free movement within the Commonwealth, not the EU).

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The rise of UKIP and the strain within the Conservative party as many of their members and backbenchers were tempted to convert to them forced David Cameron to act. His 2015 Manifesto promised the referendum on EU membership that UKIP had long been demanding in exchange for his majority victory in the elections and, seeing the obvious mathematics, UKIP supporters voted for Cameron (or tactically voted UKIP instead of Labour) in numbers significant enough to swing the election against the predictions of many of the pundits at the time. Cameron saved his party and won his government but has now been placed in a very difficult position as the referendum looms and his party threatens to tear itself asunder in the process. This is why the actual campaign has been so dismal compared to the 2014 Scottish independence referendum. It’s playing so much more as a Conservative internal party meeting and leadership contest than it is a debate on the future of Europe and the UK within or outwith it. Which way voters see things, whether we embrace the EU, reject it entirely or simply continue on with the one-foot-in approach that we’ve had more or less since inception remains very much to be seen.

Finally. After all that seriousness. A short educational video about EU stereotypes.

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8 thoughts on “Are EU In or Out? – Part 2: A Brief History of Brexit

  1. Pingback: Are EU In or Out? – Part 1: What Is The EU? | The Common Green

  2. Pingback: Are EU In or Out? – Part 3: The Issues – Immigration | The Common Green

  3. Pingback: Are EU In or Out? – Part 5: The Issues – Brexit Negotiations | The Common Green

  4. Pingback: Are EU In or Out? – Contents Page | The Common Green

  5. Pingback: Are EU In or Out? – Part 6: The Issues – Sovereignty | The Common Green

  6. Pingback: Are EU In or Out? – Part 7: Final Thoughts | The Common Green

  7. Pingback: EU’re Out, Apparently | The Common Green

  8. Pingback: QuEUing up for Membership | The Common Green

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