Is the ‘awkward partner’ about to leave
the EU? The UK’s relationship with the
EU
Mike Walsh
Economics Academic Course Director
Coventry University
Ref: UK EU relationship March 2013
(1) Introduction
• The UK joined the EEC (EU from 1993) in 1973
• Late: over 20 years after the EEC was formed!
• Within a year the UK had built up a reputation for
being the ‘awkward partner’ ( George S, 1998)
– opposed many EEC initiatives
– took an independent view
– was disruptive
• We will consider why the UK was considered to
be the ‘awkward partner’ and why EU exit is on
the agenda
UK attitudes
• These help explain the UK’s relationship with
the EU. Generally, the UK :
– Is pragmatic
– Believes in free markets
– Doesn’t want to give up sovereignty
– Wants widening of EU
– Wants less integration. No federalism
• Relevant today
– Gordon BROWN (PM) signing Lisbon Treaty 2007
– EU splits some UK political parties
(2) UK and Europe: The early years
1945-57: Preparation
• Positions of countries
– UK
• 3 circles
Empire
USA
Europe
• UK condescending?
• intergovernmental approach ok
– France
• wanted decline in German industrial power
– Germany
• wanted acceptance
European Coal & Steel Community
(ECSC)
• Schuman Plan (9th May1950)
– Monnet’s ideas
• sectoral approach
– Iron & steel major sector
– France - Germany
• ECSC
– Treaty of Paris 1951 - est. 1952
– 6 members
– Supranational from beginning
• UK not want to give up sovereignty
ECSC to EEC
• Messina (1955)
– Extend Benelux model (Spaak)
– Atomic energy cooperation (Monnet)
– UK position: don’t get involved
• Treaty of Rome 1957 (effective 1958)
– EEC Treaty
– Euratom Treaty
• UK: don’t get involved
EEC Take off and early progress
(1958-72)
• EEC economic success
• EFTA (1960)
– EEC Rival
– Included UK
• France vetoes UK entry to EEC
• Finally, success
– Hague Summit 1969
– Agreement for UK to join the EEC
– UK joined 1/1/73
(3) UK & The EU Budget
• A major issue for 40 years
Budget 2013
Cohesion
CAP
Rural development
Competitiveness
Admin
Security & justice
External
Relations
• 1st EU enlargement 1973
• UK rebate: major issue
• UK disruptive
– Veto in Council Of Ministers (pre SEA 1986)
• UK major contributor but one of poorest
states in 1970’s
– Reasons
• CAP
• Common external tariff (CET)
– Conflicts
High CAP expenditure (% budget share) when UK joined
EEC in 1973
• Fontainebleu Summit 1984
• UK rebate
• UK rebate issue resurfaced 1998 onwards
• 2005: Blair wanted CAP reform in return for
UK giving up budget rebate
• UK & France fall out!
• Outcome: UK gives up some of rebate
– With conditions
• Budget issues still exist today
– David Cameron (UK PM) in EU budget talks
– 2011: Opposed large increase in EU budget
• http://www.bbc.co.uk/news/world-europe-11652601
• 2012/13: Opposes real increase in EU budget for 2014-20
Financial Perspective
• Budget rebate AGAIN
(4) Economic and Monetary Union
(EMU)
• Monetary union ‘’launched’' 1979
– European Monetary System EMS
• EMS - 2 components
– European currency unit (Ecu)
– Exchange rate mechanism (ERM)
•
•
•
•
•
8/9 countries
NOT UK
UK eventually joined 1990
BUT, UK exit 1992
September 1992 ‘ERM crisis’
•
http://news.bbc.co.uk/player/nol/newsid_6560000/newsid_6563000/6563031.stm?bw=bb&mp=wm&news=1&bbcws=1
• Maastricht Treaty 1991
– UK & Denmark opt out of Euro
– Only countries to do so
• UK set 5 economic tests for joining
– Failed 4 out of 5 (2003)
– Political device, not economic
(5) Social Policy
• UK generally believe in free markets, laissez
faire
– ‘Anglo Saxon’ approach
– European interference in labour market
– Social Policy raises costs for firms & makes them
uncompetitive
– E.g. Working Time Directive
• Approaches by selected countries below
– UK, Ireland – free market
– Germany, Benelux countries– collective bargaining
provides worker protection
– France, Spain, Portugal, Greece- statutory
framework to protect workers rights as weak
collective bargaining
• Social Charter 1989
– Social policy expanded
– not legally binding
– opt out by…
• Maastricht Treaty
– Binding on EU States
– Opt out by……
Answer these questions relating to
Spain
• Is it easy for a firm to make a worker
redundant?
• How much social tax (%) does a firm pay on
wages
• How many days holiday does the average
worker receive?
• Do you think working more than 48 hours /
week is ok?
• If you lose your job what benefits can you
receive?
(6) What does the UK want from
the EU?
Free Trade
• Access to the SINGLE MARKET
• Very ‘Anglo Saxon’
• Single European Act (SEA) 1986
• All trade barriers to be eliminated
• Aims include
– Bigger markets for firms
– Increase efficiency of firms
– Aid integration
– Benefit consumers
• Generally regarded as successful
(7) UK: Even more awkward?
• Exit?
David Cameron’s Europe Speech January
2013
• UK renegotiate with EU?
– ‘cherry pick’ policies
– Drop which policies?
– UK want which policies?
• Hold referendum to leave EU in 2018 if
renegotiation fails
• Why?
Options if UK leave EU?
• Renegotiate agreements with EU?
– Like Switzerland
– About 200 bilateral agreements
• Join EEA?
– Access to single market
– Like Norway
• Be like rest of world?
• Scotland?
UK in Europe
(8) Conclusion
• After 40 years membership Europe still divides
UK opinion & splits political parties
• UKIP is a new anti-EU party
• UK is still the awkward partner
References
• S George, ‘An Awkward Partner: Britain in the
European community’
• R Baldwin & C Wyplosz, ‘The Economics of
European Integration’
• http://europa.eu/