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'Vote for an EU referendum and you'll plunge Britain's economy into chaos'

By Tim Montgomerie
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That is, I predict, the argument that Cameron and Osborne will deploy against Eurosceptic Tory MPs if they campaign to give the British people a vote on an EU Treaty that facilitates a roadmap to fiscal union.

But, first, let us take a few steps back.

The European Union may be about to change fundamentally but that doesn't mean the British people will get a referendum to approve or reject that change. The so-called 'referendum lock' passed by the Coalition is only triggered when powers pass from Britain to the EU. Ministers decide when and if those powers have passed and the suspicion is that a move towards fiscal union by the €urozone's seventeen will be interpreted as not affecting UK sovereignty. That was certainly Nick Clegg's position on this morning's Andrew Marr programme*:

NICK CLEGG: Well I don't think there needs to be a referendum for the simple reason that the change...

ANDREW MARR interrupts: The Prime Minister's promised one. If there is a treaty change, he's promised a referendum.

NICK CLEGG: No, the referendum will only take place if there is an additional surrender of sovereignty from us to the European Union, to Brussels.

ANDREW MARR: I thought any substantial treaty change will trigger a referendum. That's what David Cameron said.

NICK CLEGG: No, no, no. Let me be very clear. The test, which we've legislated on, is if we, the United Kingdom, give up more sovereignty in a big way to the European Union.

On Sky News a little later Iain Duncan Smith appeared to see things differently. "The Prime Minister," he said, "has always said if there is major treaty change — it is now legislated for — that we would have a referendum and he has never shied away from that. We’re the first government ever to have legislated for referendums on treaties, in other words the British public will have a say, will have a right to have a say."

I fear Clegg is technically correct but a large number of Tory MPs will fairly argue that fiscal union among a majority of EU member states will fundamentally alter 'the Club' and the British electorate should have an opportunity to say if we are happy with such fundamental rule changes. In The Sunday Telegraph Chris Heaton-Harris MP argues that a popular vote will be unavoidable:

"No one can deny the fundamental significance to the UK of treaty changes that allow for fiscal and political union for core European countries and the Government would be under considerable pressure should it choose not to allow a referendum on this emerging new relationship with the Eurozone. Asking the British people if they would allow the Eurozone to integrate further in exchange for a potentially looser relationship with it would not be the in-out referendum that many people want, but it would be, at last, a step down the road to a new and better relationship with our neighbours."

The argument that Cameron and Clegg will deploy against a referendum is that we shouldn't put the UK's desire for repatriation in the way of a resolution of the €uro crisis. Resolving the €uro crisis, they will say, is Britain's number one economic priority. But a large majority of Tory members and Boris Johnson do not see preserving the €urozone as in Britain's medium term or long-term interests. The €uro crisis is both acute and chronic. The acute crisis of indebtedness may be managed away (not eliminated) in the short-run but the chronic problem of uncompetitiveness within the single currency zone is not going to go away.

* Transcript taken from James Kirkup.


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