Prior to the referendum on EU membership due in 2016 or 2017, the UK government will pursue negotiations to redefine its relationship with the Union. David Page and Maxime Alimi from Axa IM review the themes that are likely to form the basis of these negotiations and assess the margin for compromise between the UK and its European partners. On balance, they expect such negotiations to be constructive enough for the UK government to campaign in favour of the "Yes" at the subsequent referendum.
In their opinion, the UK has yet to define, specifically, what it desires from such negotiations. This month, the UK is supposed to offer more information on what they are looking for, as promised by David Cameron at the EU leaders’ Summit, but the Axa experts believe the main topics will include:
- Trade and promotion of the Single Market– Where, according to the analysts, there is no clear disagreement between the UK and the EU
- Competitiveness and over-regulatory burden– With no clear disagreement between the UK and the EU
- Decision-making and institutional fairness- Where they believe exists much room for agreement between the UK and the EU
- Progressing towards an ever closer union– Which needs clarifying since according to them constructive ambiguity has reached its limits
- EU budget control- where, given their large deficit, the UK looks set to drive for greater cost control across the EU, while it seems like there is little room to further expand special treatment of the UK given many euro-area countries having experienced significant austerity in recent years.
- Migration, social rights and access to benefits- The most contentious issues given the UK looks for immigration restrictions while for the EU free movement of people and labor is a fundamental principle
According to Alimi and Page, “overall, many of the areas where the UK is likely to pursue change are not contrary to EU ambition. This suggests significant room for agreement between the UK and its partners on most issues.” What will happen given the few, but key, areas the UK and the EU do not agree upon? Only time will tell…
You can read the full report in the following link