Chapter 2
The Road to Brexit: The UK’s Rocky Relationship with the EU
IN THIS CHAPTER
Eyeing up Europe amidst the decline of an empire
Joining the European Economic Community in the 1970s
Transferring more power to the EU, and the rise of Euroscepticism
Deciding to “put the issue to bed” with a referendum
Zeroing in on the referendum battle lines
Just because you live next door to someone doesn’t mean you’re always going to get along. Sure, she lent you some coffee that time, but she also plays loud music at 4 a.m. The same is (sort of) true of the United Kingdom (UK) and Europe. They may be neighbors, but they haven’t always enjoyed the easiest relationship.
Many people believe that the catalyst for Brexit was the rise of nationalism and, in particular, the emergence of the Eurosceptic UK Independence Party (UKIP). But dig a little deeper and it’s clear that cracks began to show many years before that.
So, to answer the question, “How did we get here?,” we need to dust off the time machine, fire up the flux capacitor, and go further back in time — long before the referendum itself, and long before UKIP was even a twinkle in Nigel Farage’s eye.
In this chapter, I explore the history of the UK’s often troublesome relationship with the European Union (EU), and unearth some of the reasons why Europe is such a divisive subject among Britons.
From Empire to the Aftermath of World War II
Instead of covering centuries of European wars and conflict, which might, er, take a while, I’ll begin my review of UK–Europe relations in the 20th century. And if you’re wondering whether the UK and Britain are the same thing, check out the nearby sidebar “What’s the difference between the UK and Great Britain?”
The end of an empire
After building up a vast worldwide empire, particularly during the 19th century, things started to change for Britain in the 20th century. British colonies began to seek independence — and, closer to home, the sheer cost of maintaining an empire was becoming hard to swallow.
Added to this was the cost of fighting two world wars — plus the growing influence of the United States on the global stage in the wake of these wars. Bottom line? A new political environment was emerging and times were a-changin’.
India and Pakistan gained independence in 1947, and, over the following decade, many other nations sought their own independence. British rule of Palestine ended in 1948. Malaya declared its independence in 1957 after a violent uprising. And Ghana, the first black African nation to declare independence from colonial rule, followed the same year. It was the beginning of the end for the British Empire, and most of Britain’s colonies in Africa and the Caribbean gained independence in the 1960s.
Decades later, the handover of Hong Kong in 1997 (at which point Hong Kong became an administrative region of China) was seen as the final nail in the empire’s coffin.
Keeping Europe at arm’s length
What does all this mean for the UK’s relationship with Europe? With Britain’s global rule on the wane and calls for a more united post-war Europe (not least from the United States), Britain found itself looking for a different kind of global power — developing the country’s “special relationship” with the United States while seeking greater influence closer to home.
Yet British distrust of Europe remained strong and the ghost of World War II loomed large in people’s minds. The UK obviously played a prominent role in World War II, and experienced huge loss of life as a result. The idea of getting into bed with other European countries — not just Germany, but countries that sided with Germany, and countries that played a less active role in defending Europe — left a bad taste in the mouths of many.
However, there were other long-standing reasons for the UK’s reluctance to embrace Europe. Coupled with the ghost of World War II was Britain’s natural geography. Great Britain is an island, after all, separated from continental Europe. While the UK has always been technically “part of Europe,” most Brits at the time (and even now you could argue) wouldn’t call themselves “European.” Europe was a foreign land, alien in so many ways. For the post-war British public, Europe may as well have been Bolivia. Or Mars.
So, perhaps it was no surprise that, when six European countries (Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany) signed the Treaty of Rome in 1957, Britain, notably, observed but didn’t sign up. This treaty created the European Economic Community (EEC), which later formed a critical pillar of the EU — see the sidebar “EEC, EC, EU: What’s the difference?”
When Britain later applied to join the EEC in 1961, France intervened and Britain’s entry was denied in 1963. France objected again to Britain’s entry in 1967. It seemed the distrust was mutual. Britain’s distant attitude to the Continent (in which it saw itself as part of Europe but also completely separate) hadn’t gone unnoticed. It would be a few more years before Britain was allowed in.
Flares and Friends: The UK and Europe Cozy Up in the 1970s
Watergate. The end of the Vietnam War. Glam rock and David Bowie. The Beatles split. Bell-bottom jeans. We’ve fast-forwarded to the 1970s, and it’s an interesting time to be alive. This is the decade in which the UK really started to build closer ties with what would eventually become the EU.
(Of course, it wasn’t the EU yet, it was still the EEC at this time. If you haven’t already, check out the sidebar “EEC, EC, EU: What’s the difference?” to get a handle on the various names and acronyms.)
Officially joining the club
After the UK’s initial attempts to join the EEC were refused in the 1960s, it finally became a member in 1973. The UK wasn’t the only country allowed into the club; Denmark and Ireland joined, too.
Europe was prospering in the 1970s. So, too, was the idea of a federal, much more integrated Europe. Contrast this with life in the UK in the 1960s and 1970s: union strikes, power cuts, political uncertainty, and did I mention the blue jeans? The UK felt in decline compared to its newly prosperous, peaceful neighbors across the water. As the then Prime Minister Edward Heath said in the 1971 debates over EEC membership, “For 25 years, we’ve been looking for something to get us going again. Now here it is.”
Pretty much immediately after joining the EEC in 1973, the UK’s political woes got worse as it faced the enforced three-day week (a move to conserve electricity in the wake of the coal miner strikes) and high inflation. Where was the prosperity promised by politicians in the run-up to joining the EEC? The UK’s closer relationship with Europe wasn’t off to a great start.
In 1975, under the new Labour government (which had been voted in the year before), the UK held a referendum to decide whether to stay in the EEC. The majority voted in favor, with 67 percent of voters opting to stay in.
Looking for greater influence in Europe
Germany and France were the powerhouses of Europe at this time — as they still are. However, the UK government had concerns about Germany and France taking control of the European movement and hoped that, by becoming members of the EEC, Britain could exert its own influence.
It worked, too, in a way. If the UK hadn’t joined the EEC in 1973 — if it had never joined at all, in fact — would the EEC have morphed into the EU much sooner than it did? I think it probably would have, given the ambitions of major European players at that time. So, you could argue that, through its membership of the EEC and greater involvement in Europe, the UK put the brakes on the federal Europe project. Temporarily, at least.
Things (Start To) Fall Apart: The UK and Europe in the 1980s and Early 1990s
In the 1980s and early 1990s, the UK’s initial optimism about Europe started to wane in some areas of the government and public.
Alarm bells start ringing in the 1980s
Margaret Thatcher successfully negotiated the UK rebate in the mid-1980s, which saw the UK claw back some of its sizeable contribution to the EU’s budget. But this victory came at a price.
Thatcher’s tough brand of negotiation and Marmite leadership style (no one’s ever on the fence about that British food spread, Marmite — and the same could be said about Margaret Thatcher) rubbed European leaders the wrong way. Discussing the rebate, she said, “They say it’s their money, and I say it’s mine.”
Meanwhile, at home, some parts of the ruling Conservative party were growing more and more uncomfortable with the UK’s relationship with Europe. (Interestingly, support for joining the EEC had originally been strong on the right, while, on the left, the Labour Party was largely opposed to joining. This sentiment would reverse somewhat over the years.)
This discontent grew worse in the late 1980s, when French socialist Jacques Delors became President of the European Commission and began loudly voicing his dream of a more federal, joined-up Europe. A big part of his vision for Europe included common policies and, wait for it, one single currency… .
Many Conservatives were horrified by this idea of a more federal Europe. The UK had joined a common market, they said, not a European “superstate.” This sowed the seeds for dissent in the Tory Party over the issue of Europe — something that still hasn’t been resolved to this day, as Europe continues to divide the Conservatives.
Black Wednesday
As a federal Europe began to take shape, the UK joined the European exchange rate mechanism (ERM) in October 1990.
The ERM was a system for reducing variability in exchange rates to help stabilize currencies in Europe. Without getting too technical, think of it as fixed margins for currency exchange rates, with an upper limit and a lower limit — member states had to keep the value of their currencies within this predetermined range.
In practice, the ERM supported the buying and selling of European currencies, and the idea was that stronger European currencies would be sold to bolster weaker currencies. At this time, in the early 1990s, the British pound was one of the weaker European currencies. Selling the pound in large numbers would only weaken it further, and that’s exactly what happened… .
This buying and selling of currencies came to a head on what became known as Black Wednesday. On this day, September 16, 1992 (which, as you can probably guess, was a Wednesday) the pound came under huge pressure from currency speculators — currency traders began selling large amounts of sterling, which caused the value of the pound to collapse.
The Bank of England was forced to increase UK interest rates to 10 percent, 12 percent, and even 15 percent in the space of just one day. Unable to stop the pound from falling below ERM thresholds, the UK withdrew from the ERM. At the time, this was considered a real low point in the UK’s relationship with Europe.
Facing its own currency woes, Italy withdrew from the ERM the day after. The ERM in its original form had been proven vulnerable. Ultimately, this would lead to the demise of the ERM and the eventual introduction of the euro.
The Maastricht Treaty
The Maastricht Treaty, which formalized greater integration among EU member states, was drafted in December 1991 and signed by the then Prime Minister John Major on February 7, 1992 (months before the Black Wednesday crisis).
Over the years, there have been various amendments to the Maastricht Treaty, including the Treaty of Amsterdam in 1999, the Treaty of Nice in 2003, and the Treaty of Lisbon in 2009. (See the sidebar “EEC, EC, EU: What’s the difference?”) However, the Maastricht Treaty is what paved the way for the EU as we know it today, and gave the go-ahead to the creation of a significantly more unified Europe.
Critics of the EU see this as a key turning point in the UK’s relationship with Europe. They believe that, by signing up to greater integration and granting greater power to the EU, the UK had effectively signed away control of its own country. Was this something that UK voters had signed up for when they went to the polls in 1975 and voted to remain in the EEC?
The increasing transfer of power
Since the signing of the Maastricht Treaty, there has been a gradual and growing transfer of power from individual governments across the EU to central EU decision-making bodies.
For example, as the EU’s judiciary, the European Court of Justice can overrule UK law. Fishing is another key example of the UK butting heads with the EU and its member states. (Complaints of French fishing boats “pillaging” British waters. Spats on both sides about who’s allowed to fish where, when, and how much. That’s a very simplistic view of a big, complicated issue — someone, not me, could probably write a whole book on UK–EU fishing disagreements.)
Budget contributions and free movement of people have also been key areas of conflict. To read more about these issues, head to the section “Drawing the Battle Lines: Key Issues in the Brexit Referendum,” later in this chapter.
Rising Euroscepticism from the 1990s Onward
Certain EU decisions are made on a unanimous basis, which effectively means EU member states have the power to veto or block decisions in areas like taxation, foreign policy, and the euro.
Over the years, the UK has used its veto to block certain EU decisions, particularly on the single currency. The UK had declined to adopt the euro when it launched in 1999 (showing again how the UK was part of Europe, but also separate, thanks very much). Tony Blair, who had swept to power in 1997 with a clear wish to adopt the euro and patch things up with Europe, later quietly shelved plans to adopt the single currency. Britain’s economy was doing well enough without it.
Another prominent example of the UK pushing back against the EU, and the euro, came in 2011, when then Prime Minister David Cameron vetoed the Franco-German-led treaty to save the ailing euro — plans that many felt undermined British interests. Cameron’s veto prompted some serious eye-rolling and tutting among other European leaders (who simply planned to create a new deal without the UK), but delighted the more anti-Europe sections of his own party.
By this point, Europe had become a bitterly divisive issue for the Tories. Euroscepticism had been growing throughout the 1990s and beyond, really since the signing of the Maastricht Treaty. The political chasms were getting wider and wider.
Many issues were at the heart of this rising Euroscepticism, and I touch on some of the biggest in the section “Drawing the Battle Lines,” later in the chapter. But among the main sticking points for Eurosceptics was this nagging feeling that membership of the EU was costing more than it was worth. In other words, rightly or wrongly, many felt the UK wasn’t getting much back in return for its financial contribution.
When the UK joined the EEC in 1973, Britain was in a pretty sorry state and was famously dubbed “the sick man of Europe.” By the 2000s, though, things had changed. Trade unions had been weakened, strikes were (largely) a thing of the past, industry had been privatized, foreign investment was increasing, London was Europe’s premier financial center, and the housing market (indeed, the economy as a whole) was booming. Rightly or wrongly, there was a growing belief that Europe had a lot to learn from the UK, not so much the other way around. Full integration was looking more and more unlikely.
Quietly, in the background, a small Eurosceptic political party called UKIP was gradually gaining momentum. It was formed way back in 1993 (founding members had been opposed to the UK signing the Maastricht Treaty) on the basis of one simple policy: to get the UK out of the EU. UKIP was by no means an overnight success. Although it won three seats at the European Parliament in 1999, the party didn’t get a single MP elected to Westminster until 2014 (when Conservative defector Douglas Carswell became MP for Clacton). But, over time, the party certainly tapped into something deep in British voters. Anti-EU sentiment — indeed, a general distrust of mainstream politics — was growing.
Right, Lads, Let’s Have a Vote
As Euroscepticism continued to grow in the UK, nationalist parties like UKIP grew in popularity. After being dismissed as a “one-issue party,” UKIP had won a seat in the UK Parliament — and had clearly tapped into voter concerns around immigration and the concept of free movement. This was a huge wake-up call for the mainstream political parties.
What do people mean when they talk about “nationalism”? Nationalism promotes the interests of a particular nation (in this case, the UK) over and above other nations. Key to nationalist ideology is the concept of sovereignty, or the right of a nation to govern itself, without interference from external powers. So when people talk about the UK giving away its sovereignty to the EU, they’re talking about power being transferred from Westminster (the seat of the UK government) to the EU.
In 2013, then Prime Minister David Cameron was desperate to take control of the nationalist agenda and settle the issue that was causing no end of trouble in his own party. He set out plans to hold an “in or out” referendum on EU membership, but remained pretty vague about the timings, except to reject the idea of an immediate vote.
During the 2015 general election campaign, the Conservative manifesto included the promise of a referendum on EU membership. In other words, Cameron was saying, vote for me now, and I’ll give you a vote on Europe. The move paid off for him in the short term, as he won the general election. But he lost the EU referendum a year later.
What he thought was a move to “put the issue to bed” once and for all (or, at least, once and for all for that generation), backfired spectacularly for Cameron. It turned out to be one of the most brutal referendums in UK history. And the very idea of a federal Europe came under intense pressure — following the Brexit result there was fleeting talk of Grexit and Frexit coming next, with Greek and French politicians mooting the idea of their own vote.
Sure, the referendum wasn’t legally binding, but the Conservative party had committed to recognizing the final result and delivering the wishes of the people. David Cameron resigned (and was filmed innocently humming his way back to the front door of Number 10 like it was just another ordinary day). Theresa May took over from him, promised to deliver Brexit, and the rest, as they say, is history.
Drawing the Battle Lines: Looking at the Key Issues in the Brexit Referendum
Before I end this whistle-stop tour of UK–EU relations, let me take a moment or two to reflect on some of the key issues that came to the fore during the referendum campaign. Many of these issues run right to the heart of Britain’s problematic relationship with the EU.
Britain’s financial contributions to the EU
Central to the arguments of many Eurosceptics was the belief that the UK gave the EU much more, financially speaking, than it got back in return.
How much does the UK really pay in?
The UK’s contribution toward the EU’s budget changes each year. But, as an example, the UK made a gross contribution of £13 billion to the EU budget in 2017. (Without the rebate, the UK’s gross contribution would have come to more than £18 billion.) In return, the UK received around £4 billion in EU spending, making its net contribution around £9 billion.
Remember that famous bus from the referendum campaign with the slogan on the side claiming that the UK sends £350 million a week to the EU? That figure excluded the rebate and the money the EU gives to the UK for public projects and funding.
The UK also benefits from EU membership in ways that are much, much harder to estimate, including increased flow of investment, and the ability to buy and sell products easily within the EU.
But, yes, the UK does contribute more to the EU budget than it gets back. In fact, the UK is one of the biggest contributors in the EU. Much has been said about the fact that the UK contributes more to the EU budget than 26 other EU members combined. And this statistic is true. But perhaps a less emotive way to look at it is this: According to Full Fact (www.fullfact.org), in 2017, the UK’s net contribution totaled 18 percent of all net contributors.
From a completely neutral standpoint, it makes sense that richer countries in the EU will contribute more than the poorer members (who are net beneficiaries of EU money). But, still, it’s a hard thing to sell to voters — particularly in parts of the UK that have struggled economically.
Feeling the squeeze
On top of this, we’ve seen a reduced UK rebate — as the UK prospered, Tony Blair brokered a deal to give up some of its rebate — and calls from some EU members to scrap the rebate completely.
What’s more, in recent years, the EU has moved to include sex work and sales of drugs in gross domestic product (GDP) calculations, which further boosts the UK’s estimated contribution. (In 2014, the Office for National Statistics began adding up the contribution to the economy made by prostitutes and drug dealers — it came up with a figure of almost £10 billion!) As one newspaper headline put it at the time, the EU would be making the UK pay for our, er, bad habits.
GDP is the term used to describe the value of all the goods and services that a country produces in a given time (usually calculated annually). As a measure, GDP is used to indicate a country’s prosperity and national development. You may also hear people talk about GDP per capita, which measures the ratio of GDP to the country’s population.
To cut a long, and very complicated, story short, Eurosceptics were uneasy about the UK’s significant contribution to the EU’s spending pot, and questioning whether it was all worth it.
“Picking up the slack” for others?
Under EU rules, a member state’s budget deficits (where spending is higher than revenue) must not exceed 3 percent of GDP. And public debt (government and public agencies’ debt) must not exceed 60 percent of GDP. These rules are designed to ensure EU members manage their public funds in a sensible, sustainable way. That’s the idea anyway.
The Italian government is (at the time of writing) going through a disciplinary process for falling foul of these rules, after reporting a deficit of 3.1 percent and public debt of more than 130 percent of GDP. To put that in context, the UK’s deficit is 1.8 percent of GDP and public debt is around 87 percent of GDP — the latter being higher than the EU’s threshold, but nowhere near as large as Italy’s.
This disparity across the EU is another major underlying factor in the UK’s distrust of Europe. To some, it seemed the UK was picking up the slack or propping up countries that were not as fiscally responsible as others.
Immigration and free movement of people
Many Remainers suggest that immigration was behind the UK public’s decision to vote “out.” It wasn’t the only issue, but public opinion appears to show that it was one of the key factors.
But, for some reason, the issue seemed to catch the mainstream political parties by surprise — even though the growing backlash against the idea of free movement was plainly obvious to anyone who read the newspapers or listened to the average conversation on the high street in the run-up to the referendum.
To stem the negative tide, before the referendum, David Cameron tried to negotiate a “handbrake” system for the UK benefits system. This system would have denied EU migrants full benefit entitlements for a set period of time after they arrived in the UK, and was designed to combat sentiment that too many EU migrants came to the UK to claim benefits. However, EU leaders believed this system went against the principle of the free market, and the idea was rejected.
Not only did large sections of the UK media portray EU migrants as coming for the benefits, but it also portrayed them as “pinching British jobs.” The two fears aren’t exactly compatible — are migrants coming to live off welfare or to steal people’s jobs, which is it? — but it goes to show how Brexit is such an emotive issue for Brits.
Ultimately, the overwhelming sentiment from much of the media was that EU migrants were a “drain on the system.” Yet, official government figures show that EU migrants are in fact net contributors to UK finances, meaning they pay more in taxes than they take out in terms of public services (like healthcare, education, and so on). In fact, an Oxford Economics study found that the average EU migrant contributes £2,300 more to the public purse each year than the average British adult. In other words, EU migrants living in the UK more than pay their way.
The tricky issue of trade
Opinions and statistics regarding UK–EU trade will vary depending on who you talk to, and in fact the UK and EU calculate export trade differently (which is helpful of them).
One thing is clear, though: The UK runs a trade deficit with the EU as a whole, which means the UK imports more goods and services from the EU than it exports to the EU. In 2017, UK exports to other EU countries totaled £274 billion while imports from the rest of the EU into the UK totaled £341 billion. Those figures are based on Office for National Statistics data — the EU calculates imports and exports slightly differently.
Depending on which source you look at, between 8 percent and 18 percent of EU exports arrive in the UK. Meanwhile, UK exports to the rest of the EU come to well over 40 percent of total UK trade. This means the UK is heavily reliant on the EU as a trade customer.
On the other hand, a staggering 23 member states have a trade surplus with the UK — which means they export more to the UK than they import from the UK. Germany and Spain are the biggest EU exporters to the UK. On that basis, Eurosceptics argue it’s in the EU’s best interest to negotiate a trade deal with the UK as soon as possible. (Read more about the negotiation process and what will happen with trade in Chapters 3 and 4.)
There’s also the issue of financial markets. As a leading worldwide stock market, London is key to Europe’s money markets and commodities, and many European companies have loans that are financed through London. Quite what will happen when these loans are due to be refinanced remains to be seen. But if a workable solution isn’t reached, it will impact not only the London financial market, but also European money markets and everyday European businesses.
UK sovereignty
Slowly but surely, more and more power has been transferred from EU member states to Brussels. As an example of this, the European Court of Justice has dealt a number of hammer blows to the UK government with various policies being ruled illegal.
A key argument of Eurosceptics was that the British public never voted to join a federal Europe, where the UK’s laws would be dictated by the EU. Nor did they agree to the European Parliament having the final say on policies passed by the UK Parliament. The UK joined an economic union, not a social and political union. If the people voting in the 1975 referendum had known they were ultimately voting to stay in a federal Europe, would the result have been different? Quite possibly.
A big part of the problem lies with the politicians, here — specifically, a lack of honesty on where Europe was going and what it would mean for UK sovereignty. In his 1971 white paper on joining the EEC, then Prime Minister Edward Heath promised “no erosion of essential national sovereignty.” Yet, in 1972 the UK Parliament passed the European Communities Act, which accepted the supremacy of EU law.
I guess you could argue Heath’s word essential leaves some wriggle room, but, to the voting public decades later, it seemed like the wool had been pulled over a lot of people’s eyes.
Divided kingdom? How the referendum results played out across the UK
The UK’s constituent countries voted quite differently in the referendum. Table 2-1 breaks down the results by country.
TABLE 2-1 UK Countries Brexit Vote Results
Country | Percent Voting to Leave | Percent Voting to Remain | Result |
England | 53.38% | 46.62% | Leave |
Scotland | 38% | 62% | Remain |
Wales | 52.53% | 47.47% | Leave |
Northern Ireland | 44.22% | 55.78% | Remain |
Devolved parliaments in Scotland and Wales (even though Wales voted to leave as a nation) have been highly critical of the move to leave the EU, and the ruling Scottish National Party (SNP) government in Scotland has been trying to use the result to push for another Scottish independence referendum.
The situation in Northern Ireland is slightly different, with the ruling Democratic Unionist Party siding with the UK government on Brexit (even though the public in Northern Ireland voted to remain). And despite the fact that the Welsh population voted to leave, the Welsh devolved parliament is siding with its Scottish counterpart on a remain policy. Isn’t politics fun?
In any case, what this will ultimately mean for the United Kingdom as whole remains to be seen. For now, the jury’s out, and we’ll wait to see if a Scottish independence vote does materialize. You can read a little more about Scottish independence in Chapter 12.
Meanwhile, what did the EU make of all this?
Like many in the UK, prior to the referendum result, EU officials generally felt there wasn’t a chance in hell that the British public would vote to leave the EU. Secure in this belief, the EU itself took quite a backseat role in the referendum, doing little to play up the benefits of EU membership or counteract claims from Leave campaigners.
Just like David Cameron, the EU was looking forward to finally resolving this nagging issue of a UK exit. The vote was supposed to kick the subject into the long grass so that everyone could get back to the business of governing. But things didn’t exactly pan out that way, and the UK’s tumultuous relationship with the EU was reaching its painful, drawn-out climax.