If you read the popular press in the UK, it will be clear that its relationship with the EU is not exactly sweetness and light. Learned prose about EU imposed `straight bananas` and `batty beauracrats` go down well with the public. Against this pretty hostile backdrop, the Conservative party have promised the country a referendum on whether the UK will stay in, or leave the European union in 2017. But this fundamental vote (should it actually happen) will not be an issue confined to that year. Governments and businesses will be making investment decisions in the interim, based on the perceived outcome. Of course, one of the biggest issues about announcing such a major issue so far in advance, is the long period of uncertainty it creates, and miriad uncertainty in this case is the only certainty ! Not a negative for the currency now, but nagging doubt about a clear long term path may become a weight – especially if the` Out` lobby gains traction.
The stated reason for this long incubation period, is that it will take the newly elected Conservative party (crystal ball time..) the best part of two years sfter the 2015 election, to renegotiate Britains place in the union, and once there is an outcome to these negotiations, then a clear proposal on the revised terms will be put to the people. As stated previously, there is a lot that could change here. The stance of the oposition parties will be vital; both Labour and the Lib Dems are inclined to be pro european, and are concerned not to be `anti choice`, but they have to be different. My guess is that Labour will back the referendum, but will do so under existing terms of membership. They will argue that any re-negotiation is likely to be insubstantial, (almost certainly true – but it will not be spun that way). There is a lovely quote about this from the EU council president who described the dilemna as`How to encourage a friend to change if your eyes are searching for your coat`.
I believe that a referendum WILL take place, and despite recent negative polls, I believe firmly that the UK WILL maintain its membership – under revised terms or not, but a lot of water will flow under a lot of bridges before then !