Demystifying Brexit: The ‘ins & outs’ of the EU referendum
British Prime Minister David Cameron unveiled his deal struck with his 28 EU counterparts on Friday, aimed at adjusting Britain’s membership of the bloc with an emphasis on sovereign control over migration and the finance industry.
Cameron has spent the weekend trying to convince high-profile Conservatives to join the ‘remain’ campaign for a reformed union, but a rebellious cabinet is threatening to leave the Tories in tatters as global financial market respond to the deal.
The prime minister has said he will hold a vote on June 23. The two camps have now begun to campaign in earnest.
What did Cameron want?
The PM focused his negotiations on four areas: exemption from the political notion of ‘ever closer union’, tighter control on British borders and welfare payments to immigrants, safeguards from the eurozone and less financial regulation.
In particular, he wanted Britain to be able to opt out of EU legislation, meaning the country could not be drawn into political integration in a “formal, legally binding and irreversible way.”
He also advocated an emergency brake on welfare payments given to migrants living in the UK, meaning the UK could remove benefits for up to 13 years from migrants who have been in the country for less than four years.
What did Cameron get?
Cameron’s negotiations were broadly successful. He secured an agreement that Britain would be exempt from ‘ever closer union’, but was forced to compromise on other areas.
The proposed emergency brake on migrant welfare payments was agreed but will be in place for a maximum of seven years, almost half the length the PM suggested.
However, Cameron did broker a deal stipulating countries who don’t use the euro will not be required to fund bailouts for eurozone countries and will also be given compensation for funds used to prop up the currency.
His demands for less business regulation were met, as they were the least controversial of all negotiation topics. But similar promises have been made before without countries feeling all the benefit of reduced red tape.
Who will support the PM?
The deal has seen Cameron scramble to assemble a core group of supporters within the Tory party. Among cabinet supporters are Home Secretary Theresa May and Defence Secretary Michael Fallon.
Responding to claims that staying in the EU would make a Paris-style attack more likely, Fallon told the BBC on Monday that collective security was more important for Britain.
“At the moment our security, our defense, rests on NATO, not on the EU. But the EU adds to that security. I don’t know any member of NATO that wants us to leave the EU because the EU can do things that NATO cannot.”
The PM will also count on the support of Labour Party leader Jeremy Corbyn, who said his party would back the ‘remain’ campaign regardless of the outcome of negotiations.
He has the support of some major supermarkets too. Sainsbury, Morrisons and Tesco refused to sign a letter calling for Brexit, saying the decision was for the people of Britain only.
Cameron is facing a backlash in his own party as top ministers announce their allegiance to the ‘leave’ campaign. So far, Mayor of London Boris Johnson, Justice Secretary Michael Gove, Work and Pensions Secretary Iain Duncan-Smith and London mayoral hopeful Zac Goldsmith are among those voting to opt out of the bloc.
Johnson’s father said the move could prove “career-ending.”
Duncan-Smith has argued that remaining in the bloc could increase the chances of a Paris-style attack on Britain.
“This open border does not allow us to check and control people who may come and spend time. We see what happened in Paris where they spent ages planning and plotting. Who is to say it is not beyond the wit of man that those might be already thinking about that,” he told the BBC.
Following Johnson’s decision to back Brexit, the pound suffered its biggest one-day fall since 2010.
RBS Capital Markets analyst Sam Hill blamed the Out Campaign for weakening the pound.
“With both Michael Gove and Boris Johnson coming down on the “leave” side of the debate, and almost half of the Conservative MPs, it is understandable that sterling’s initial move has been lower,” he said.
The pound is currently down by over 1.9 percent against the US dollar at $1.4122, a fall of 2.7 cents.
Ratings agency Moody's, who determine the government's credit score, also warned that leaving the EU could push up the level's of Britain's borrowing.
“We consider it positive that the referendum will take place as soon as June, as a lengthy period of uncertainty on the part of firms and investors would damage the UK’s economic growth prospects," Kathrin Muehlbronner from the firm said.
It has also been reported that half of the FTSE 100 are thought to have signed a letter calling for Brexit, to be published on Tuesday.