London’s the deal: on what terms will Britain remain in the European Union

The Prime Minister of great Britain David Cameron has managed to convince 27 of his European Union colleagues of the need for reform of the European system. “I don’t like Brussels, I love Britain, said after tense negotiations. — My job is to do everything in my power to defend our interests”. The deal with the EU means that London can continue to be “stand alone” in Europe on migration and financial Affairs, also enlisting the support of its political independence.

Negotiating a British exit from the EU (so-called Brexit) was held at the next European Council summit — a two-day meeting of heads of state and government of the EU. She was entirely devoted to the British problem. The previous summit was held in mid December and the main topics of it were the issues of migration, fight against terrorism, the common market and only then plans the UK to hold a referendum on leaving the Union.

Over the past two months the priorities of European leaders has changed dramatically. Judging by the published program of the summit, the theme of Brexit it was planned to devote the first work session and business Breakfast on Friday morning. In fact, Cameron’s proposals had been discussed all evening Thursday and all Friday — from Breakfast to midnight (a total of about 30 hours).

The essence of the transaction

Claims of citizens of the UK to Brussels, Prime Minister Cameron expressed in the fall of 2015 in a letter to the head of the European Council Donald Tusk. The British leader has formulated four proposals for the reform of the European Union, the performance of which would depend on the government’s position on the issue of referendum.

Cameron demanded, first, full equality within the EU, countries with different national currencies. Further, this guarantees that Brussels will not press for greater political integration of Britain with the EU. Thirdly, the removal of remaining trade barriers and, finally, transmission to the national authorities powers to resolve migration issues.

In response to the letter Tusk has proposed to harmonize the positions for February’s EU summit. Talks in Brussels dragged on due to the fact that prior to the meeting, the parties were unable to reach a compromise. Besides Tusk must seek unanimous approval from the remaining 27 countries of the European Union. On the opening day of the summit The Guardian published a draft of the final statement of the summit, from which, according to the newspaper, we can conclude that the deep disputes between members of the Union. The most important issues have been enclosed in square brackets — a sign that the final agreement yet.

In the end, London has secured its position — both practical and symbolic issues. Despite French opposition, Cameron has provided the city of London financiers independence from European regulators and the principle of walking in multiple EU currencies, and achieved the formal recognition of Britain’s rights to refuse further integration. Concerning subsidies working in Britain immigrants from Eastern European member countries of the EU and other reforms, require changes in the Lisbon Treaty, the parties reached a compromise: Cameron has achieved at least the clauses in European legislation for their country, but not a complete rewriting of the agreements.

Overall, the story of the protracted negotiations can only be a political move of Cameron, said the Deputy Director of IMEMO Alexei Kuznetsov. “The Prime Minister is trying to get political points in order as soon as possible to hold a referendum and receive approval for continued membership in the EU, — said Kuznetsov. But for this he needs to obtain a number of concessions from the EU and its members”. After the summit Cameron will gather in London the Cabinet of Ministers, the date of the referendum he had called on June 23 to cancel it he can’t, because his organization was one of the campaign promises of the conservatives.

The people not against

Victory for Cameron, who achieved for his country’s “special conditions” continued membership in the EU, as a supporter of the “Pro-European parties”. The failure of the negotiations, as repeatedly hinted politician would mean that he and his party will agitate for secession from the Union.

Cameron is eurosceptic

The theme of the UK out of the EU Cameron lifted in January 2013: in case of victory in parliamentary elections in 2015, he has promised to organize a referendum on leaving the EU no later than the end of 2017. After the victory of the conservatives, the referendum has been given the green light.

Since Margaret Thatcher, the British refuse to force integration with continental Europe. For example, at the stage of creation of the European Union, which in 1992 replaced the European communities, London managed to get right to evade the execution of some European laws and agreements (so-called opt-out). So, Britain does not participate in the Schengen visa-free travel agreement, has the right not to join the Euro zone, and also released from certain obligations in hosting the refugees. In addition, London has a certain freedom in the application of the EU Charter on human rights (we are talking about the document under British law).

The results of the referendum on leaving the EU is definitely still impossible to predict. About this back in November, experts warned Royal Bank of Scotland. This uncertainty, in their view, even before the voting starts to have a negative impact on the British economy: the international companies will be wary to invest in the UK and hire staff there.

The February Ipsos poll found that 54% of Britons surveyed would like to stay in the EU, compared to 36% of supporters of the exit. At the same time, the February research Agency YouGov in conjunction with the newspaper The Times cites different figures: 45% of respondents Express support for Brexit, compared to 36% of supporters of the European way of development.

The British themselves underestimate the impact of leaving the EU, I’m sure Kuznetsov from IMEMO. However, in reality, according to the expert, such a scenario has the potential to re referendum on Scottish independence and the split of the Kingdom. “Many of the fighters for sovereignty in Europe fear that if they gain independence, the former mother country will veto the entry of a new country in the EU, — said Kuznetsov. But if metropolis itself out of the Union, European integration Scotland will become much more real”.

The market is waiting for

The greatest concern because of the prospect of a referendum was expressed by the businessmen. In mid-February, the Confederation of British industry (CBI) — the country’s largest Union of entrepreneurs openly supported the proponents of the UK in the EU. “There are strong overall benefits to trade freely in the market, uniting 500 million people, — said the head of the CBI Carolyn Fairbairn. Can’t you just take for granted the important economic ties that unite us, create jobs and help the investment.”

At the same time, the FT poll showed that of the 100 corporations that are members of the London stock exchange’s FTSE index, only 18 are ready to Express his opinion in favor of conservation in the EU. Among the ten largest (by revenue) companies in the index, these firms only two: Shell and Vodafone. On Friday, the voices of the opponents of secession joined the management of Standard Life, one of the largest in the UK insurance companies. Two years ago one of the first companies threatened to move its headquarters from Edinburgh in the event of victory in the referendum supporters of independence of Scotland.

Even last spring, the German Fund RIAC program Manager Natalia evtikhevich stated that the release of the Kingdom from the EU may “cost” him from 0.1% to 0.4% of GDP — depending on whether it is a “soft” exit (preserving access to the common market) or not. Now the Foundation’s research shows that when the peace developments UK income per capita will fall by more than 5%. In the worst case, the average Briton poorer quarter. In other EU member States the index falls on average by 1-2% when soft and 3-4% at the “hard” scenarios.

In December, the British conservative politician Lord Stuart rose, a supporter of save Britain in the EU, estimated that the withdrawal from the common market will cost the country £11 billion annually. For this he took the volume of imports from the EU in 2014 (£220 billion), adding a 5% fee. In this case, the British may remain in the free trade zone, but then the government will be forced to resort to non-tariff methods of regulation (e.g. public procurement), Kuznetsov believes. On the other hand, the expert agreed that the outflow of investment, leaving the headquarters of transnational corporations (such a possibility, for example, said HSBC) and collapsing trade in amount to cause much more damage than calculated by Lord rose customs duties.

The financial services market, according to lobby group TheCityUK, around 12% of UK GDP or approximately £180 billion ($260 billion) annually. The market provides employment to 2.1 million people and brings into the Treasury £66 billion ($95 billion) in taxes. In some segments — for example, trading in interest rate derivatives or foreign currency — British financiers are world leaders with a share of 49% and 41%, respectively. “The recognition that the principle of competition is vital for the EU, it is extremely important for the future of the Union. We are therefore pleased that the Prime Minister’s call to remove the barriers was heard”, — said at the summit, the Director of TheCityUK Chris Cummings. At the same time, Cummings said that the city is waiting for the decision of the Cabinet of Ministers on the date of the referendum to “end the protracted period of uncertainty for business.”

After the announcement of the talks the pound sterling rose to its five-day high against the US dollar to $1.44 a pound.