Britain and the EU referendum: a story of losing control?

Simon Bulmer  - Associate Fellow, SPERI, & Professor of European Politics, University of Sheffield

Boris Johnson’s advocacy of such a break (the ‘Canada option’) is quite remarkable.  The mayor of the UK’s leading financial services centre is advocating precisely the association arrangement that would be against the interests of the City of London.  The City’s ability to sell financial services is reliant on the ‘single passport’.  Outside the single market ‘passporting’ by the financial services sector is not permissible.  The City would have to re-focus on hedge funds, which tend to favour Brexit, or as an offshore entity to contain the consequences.

Perhaps it is worth noting Open Europe’s analysis of the trade risks of Brexit.  Its report shows that financial services (excluding insurance) is the sector with the biggest trade surplus with the EU (£19.9 bn) and is the sector with the largest share of Foreign Direct Investment into the UK (49 per cent).  Whatever one might think of the imbalances in the UK economy it is incomprehensible that the Mayor can advocate a Brexit scenario for London, given the projected high risk impact on financial services.

Of course, the EU might happily come to some post-Brexit agreement on tariffs on goods—as argued on the Leave side—but aerospace is the only sector where Britain has a small surplus with the EU.  An agreement on passporting will be much less appealing to the likes of France and Germany, who will hope to attract London’s financial services to their financial capitals, and inside the Eurozone to boot.

Now let’s turn to sovereignty, a key issue of control, which tends to elide three different concerns: a loose preference for more control over our destiny; the ability of central government to take charge of policy (national sovereignty); and Parliament’s control over legislation (parliamentary sovereignty, dating back to the English Civil War).

The embrace of globalization by successive governments since Margaret Thatcher has raised major issues of control: over the steel, motor and energy industries, to take three instances of sectors characterized by considerable foreign ownership. Our future electricity supplies are contingent on decisions in the boardroom of EDF and with the financing of China.  Successive British governments have ceded control through privatization, deregulation and financialization, yet this aspect of control is scarcely considered in the current debate.

National sovereignty, however, is a different matter. British governments have sought to keep control over some key policy areas.  This is how the Major government achieved the opt-out from joining the euro; and how successive governments have maintained border controls by staying outside the Schengen zone; and sought to block moves to qualified majority voting in the Council of Ministers on matters such as direct taxation.  The EU ‘doing things to Britain’ characterizes the discourse on national sovereignty.  Yet the British government can be an influential player in the EU, doing things to others!  This was, after all, how the EU single market came about with the successful efforts to export Thatcherite reforms to the EU.

National sovereignty has been a recurring theme for Britain’s relationship with the EU. But it typically recurs when there are splits within and/or between the main parties on Europe.  Mrs Thatcher’s ceding of single market powers to the EU is never seen in this light.  And she had the Single European Act ratified by Parliament through the guillotine procedure.

Which brings us to parliamentary sovereignty: another totemic principle in the British constitution. The lack of national parliamentary control over EU decisions is a contributory factor to the EU’s ‘democratic deficit’.  However, it can as often be attributable to national governments not allowing their parliaments sufficient say in EU decision-making, as the guillotine procedure on the Single European Act demonstrates.

Yes, the European Court of Justice has ‘disapplied’ parliamentary legislation—on fishing quotas (in the Factortame no 2 ruling, to be precise).  The ruling was symbolic yet it was the British government that had drafted the legislation in contravention of EU treaty principles.

Once the details of national sovereignty and parliamentary sovereignty are unpacked, they seem to be revealed as much as legacies of Britain standing alone in 1940 and of Dicey’s 1885 The Law of the Constitution than today’s world of control in an era of global ownership, offshore tax havens, climate change and increasing global inequality.

One way or another ‘control’—whether over the shape of the campaign or over the UK itself—is going to go a long way to shape the eventual outcome.