Analysis: David Cameron could face a real dilemma

By Professor Drew Scott
Published on 02/07/2012 00:00

DAVID Cameron’s comments this past weekend make it virtually certain that a referendum will soon be held on the terms of the UK’s membership of the European Union.

In the only EU referendum thus far, in 1975, a majority of two to one endorsed membership. If opinion polls are correct, it is difficult to imagine a similar result today.

Which is perhaps why David Cameron is reluctant to put before voters the same question. He may prefer a referendum question that gives him a broad mandate to “renegotiate” the terms of UK membership. The problem is many of the EU policies and laws critics want to see reforms related to obligations that must be met to ensure that British goods, services, capital and workers have free access to the EU single market.

Last week’s decision by the eurozone countries to begin constructing a “banking union” is likely to provide an opportunity for a UK referendum. Under a banking union, eurozone countries collectively will stand ready to bail out an insolvent bank, subject to the proviso that competence for regulating these banks is transferred to the European Central Bank.

This is likely to require revisions to the EU Treaty, and UK consent will be required before a revised treaty can become law.

Under the terms of the 2011 European Union Act, the UK government is legally obliged to hold a referendum before agreeing to a proposed treaty change if it will transfer powers from the UK to the EU.

As the UK intends to remain outside the banking union, it would seem no referendum is necessary. Yet many will argue that the UK’s influence over the future rules of the EU single market in financial services may be undermined. Some expect this would lead to severe difficulties for a range of international financial services firms in the City of London.

But holding a referendum on a treaty revision that does not directly affect the UK interests will not go down well across the EU.

But David Cameron could expect serious trouble from his back-benchers if he denied what some would regard as a legitimate opportunity to conduct a referendum on the UK’s relations with the EU.

• Drew Scott is professor of European studies, School of Law, University of Edinburgh.