UK to hold referendum on leaving EU, expert predicts
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So is this really likely?
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The reportThe report came from Alastair Newton, an analyst with the bank and an ex-British diplomat - the bank has emphasised it is purely his personal opinion.
In his series on 'Issues That Keep Me Awake at Night'. He coined the term BRIXIT to describe Britain leaving the union. His core argument was not that the EU is damaging as it is, but that in order to save the euro, the EU may be forced to take huge steps towards further integration - including fiscal union - which would mean a state that wanted to remain separate from the euro could not be part of the EU.
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The report said: "It is only a matter of time, in our view, before crisis-related steps are agreed which necessitate treaty changes. In those circumstances, the British government will almost certainly demand 'treaty change for treaty change' in an effort to repatriate powers, ie be looking to win repatriation of powers to London for every concession on treaty reform sought by the eurozone on a one-for-one basis. However, in so doing the UK would likely be looking to repatriate powers which EU partners may be unwilling to concede within he context of the single market."
He added: "The eurozone crisis has fuelled eurosceptic sentiment in the UK. The British government's response to the crisis of encouraging closer eurozone integration while looking for a looser UK relationship with the EU appears to be fanning eurosceptic flames. The next few weeks could be critical in the evolution of the eurozone crisis. Consequent developments in Europe could result in further pressure on the British government to commit firmly to a referendum on EU membership.
Will Britain leave the EU?It's an issue that has been raised before. Tony Blair told German Newspaper Die Zeit yesterday that he was concerned the eurozone debt crisis could precipitate "powerful political change of the EU". He said: "I am deeply worried that Britain could decide by referendum to leave the whole process."
"If this is done wrongly, we could create a political crisis that could become just as a big as the euro crisis. People will not go along with the abolishment of the nation state."
Support for the unionThose who support the union have always argued that it is essential for trade with the EU. Newton himself is deeply troubled by the idea - although he does not take sides. He said: "The increasing possibility of either a looser UK relationship with the EU or a UK exit is bound to raise both economic and political concerns including in financial markets."
Cameron said in a speech in October that Britain's future lies with Europe. He said: "Our national interest is to be in the EU, helping to determine the rules governing the single market - our biggest export market, which consumes more that 50 per cent of our exports and which drives much of the investment into the UK. That is not an abstract, theoretical argument: it matters for millions of jobs and millions of families in our country. That's why successive Prime Ministers have advocated our membership of the EU."
Arguments againstHowever, increasingly other areas are more vital to British trade - especially as the European economies falter. The latest figures from the Office for National Statistics in July showed that Britain is now exporting more to countries outside the EU than to those in it for the first time since it joined the Common Market in the 1970s. Some 51% of British exports went to countries outside the EU last year.
Of course, the Liberal Democrats are opposed to leaving Europe, so if a referendum was called, it would mean a collapse of the coalition and an early general election - so we would essentially have two chances to vote on whether we wanted to stay in the union.
But what do you think? Is the EU good for Britain, or is it set to be a millstone? Let us know in the comments.
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