As the UK leaves the European Union, I wanted to take a fresh look at Britain’s post WW2 relationship with Europe, and what has become the EU, leading up the the 2016 referendum and the demise of the Cameron Government.
In undertaking this exercise I hope to better understand the opinions of others who take the opposing view to mine.
THE ORIGINS OF THE EUROPEAN UNION
During a speech in Zurich in 1946, Winston Churchill spoke of the need to form a ‘European Family’ or (he actually used the phrase) a ‘United States of Europe’ to ensure peace and prosperity for Europe.
The first formal move towards the European Union (EU) was an agreement between France, Germany, Italy and Benelux (Belgium, the Netherlands and Luxembourg), to share control of coal and steel. This was known as ‘The Schuman Declaration’ named after the French Foreign Minister, Robert Schuman, who was its pioneer.
In 1951 the six countries established the European Coal and Steel Community (ECSC). The plan behind the treaty was to pool coal and steel resources under the management of a supranational body in order to ensure that war in Europe was not ‘merely unthinkable, but materially impossible’. The underlying political agenda was also to strengthen Franco-German relations and make the two states dependent on each other in order to prevent future conflict. It was also hoped that the ECSC would lead to greater economic integration between its Member States.
The United Kingdom, one of the leading European powers after the end of the Second World War, sought to undermine efforts to create a ‘supranational’ Europe. The UK feared that being part of a more deeply integrated Europe might undermine its ‘special relationship’ with the United States. Ironically, its stance in opposition to deeper European integration annoyed US authorities and damaged its relationship with the US anyway.
However, the UK was invited to take part in talks that led to the founding treaties of the EU; the Treaty of Paris (1951) and the Treaty of Rome in 1957, which created the European Economic Community (EEC), or ‘Common Market’.
The British government did not engage in a significant way with these talks and signed neither treaty at the time. It disliked many of the supranational elements in the treaties, it was worried about damaging links with the US and Commonwealth countries and it wished to pursue a ‘one-world economic system’ policy in which sterling was a central currency.
However by 1963 the UK was beginning see the economic benefits of joining the EEC but its applications were being firmly rejected by France.
An Extract translated from the French President, Charles DeGaulle’s Veto on British Membership of the EEC (14 January 1963):-
“If England asks in turn to enter, but on her own conditions, this poses without doubt to each of the six States, and poses to England, problems of a very great dimension.
England in effect is insular, she is maritime, she is linked through her exchanges, her markets, her supply lines to the most diverse and often the most distant countries; she pursues essentially industrial and commercial activities, and only slight agricultural ones. She has in all her doings very marked and very original habits and traditions”.
“In short, the nature, the structure, the very situation (conjuncture) that are England’s differ profoundly from those of the continentals. What is to be done in order that England, as she lives, produces and trades, can be incorporated into the Common Market, as it has been conceived and as it functions? For example, the means by which the people of Great Britain are fed and which are in fact the importation of foodstuffs bought cheaply in the two Americas and in the former dominions, at the same time giving, granting considerable subsidies to English farmers? These means are obviously incompatible with the system which the Six have established quite naturally for themselves”.
The UK’s non-participation in the 1951 and 1957 treaties meant that when it did finally join the EEC in 1973 it had to accept many elements controversial among some British voters, which had been established before it joined. For example its supranationalism, the Common Agricultural Policy and its budget.
A TIME OF MANY CHANGES
There were many changes in Britain around this time, some, including replacing the old “purchase taxes” with Value Added Tax (VAT) were related to joining the EEC, others such as switching to “Metric Systems” had already been on the cards for a while.
In 1971, Britain made the switch from Roman-style currency (pounds, shillings and pence) to decimal currency. Although many pundits predicted that the changeover would be a disaster, it was a major success. Two key reasons for this success were; firstly that the Government provided lots of useful information both in the run-up to the changeover and during the changeover period; secondly the old coinage was rapidly withdrawn from circulation thereby helping the public confront change as soon as possible.
In contrast Britain’s metric conversion, failed to follow these critical success factors. During the second half of the twentieth century, most countries that had previously used traditional units adopted metric systems. Japan abandoned traditional units in 1955 and India started to adopt metric in the late1950s. With Britain announcing its plans to go metric in 1965.
The metric system is important for British trade and therefore for British jobs since 88% of trade is with metric countries. Despite legislation, British consumers still bought their meat and vegetables by the pound and to this day they travel in miles thus rating the economy of their vehicles in miles per gallon while buying the fuel by the litre!
A STRONG CASE FOR THE ECONOMIC BENEFITS
While Britain’s industrial performance had remained strong following the end of the war, many negative factors coalesced during the 1960’s and growth continued to be disappointing. Both main political parties had come to the conclusion that Britain needed to enter the European Economic Community (EEC) in order to revive its economy. This decision came after trying to establish a European Free Trade Association (EFTA) with other, non-EEC countries which had provided little economic stimulus to Britain’s economy. Levels of trade with the Commonwealth had halved in the period 1945–1965 to around 25% while trade with the EEC had doubled during the same period.
History is very clear that things have gone very well for the UK’s economy as a member of the EEC.
Firstly, since the year the UK joined the EEC, GDP per capita in the UK has grown faster than in the two other big economies of France and Germany and also exceeded growth in the USA. Secondly, growth in the UK was more equally shared than in the USA since 1974, median income in the UK grew by 79%, in contrast to 16% for the US.
As its immediate neighbour, the EU remains hugely important to the UK economy with 45% of all UK exports going to EU member states. Of that percentage, services account for 42% of these exports. Financial services and other business services (a category which includes legal, accounting, advertising, research and development, architectural, engineering and other professional and technical services) are therefore important categories of services exports to the EU.
A ROUGH RIDE POLITICALLY
Despite the benefits, Britain’s entry into the EEC never went smoothly.
The Conservative government of Edward Heath did not hold a referendum before the United Kingdom joined the European Communities in 1973. The Labour Party’s manifesto for the 1974 general election included a pledge for an in-out referendum after a renegotiation of its membership. Accordingly, after Labour won under Harold Wilson, the referendum was held on whether to remain in the Communities after a renegotiation of its membership. The result was 67% in favour of remaining.
In 1979, the United Kingdom opted out of the newly formed European Monetary System (EMS), which was the precursor to the creation of the single European currency.
The opposition Labour Party campaigned in the 1983 general election on a commitment to withdraw from the EEC without a referendum. It was heavily defeated and the Conservative government of Margaret Thatcher was re-elected. The Labour Party subsequently changed its policy.
Although no further referendums were held, various UK governments were supported on the basis of negotiations with the EU. In 1985, the United Kingdom ratified the Single European Act – the first major revision to the Treaty of Rome – without a referendum, but with the full support of the Thatcher government.
A rebate system was first introduced in 1985 and remained unchanged in its basic concept since. It is best understood with reference to some features of the UK economy and of the common budget at that time. Each year, the amount of the rebate was determined by a complex calculation, linked to several variables and which evolved over time to take into account developments in the EU and its financing system.
In October 1990 – under the Conservative governance of Margaret Thatcher – the United Kingdom joined the European Exchange Rate Mechanism (ERM), with the pound sterling pegged to a basket of eight other European currencies. Thatcher was forced to resign as Prime Minister in November 1990, amid internal divisions within the Conservative Party that arose partly from her increasingly Eurosceptic views.
The United Kingdom was forced to withdraw from the ERM in September 1992, after the pound sterling came under pressure from currency speculators (an episode known as Black Wednesday). The Conservatives remained in power with John Major as Prime Minister.
As prime minister from 1990 to 1997, John Major entered the scene as a pro-European, bent on being at the heart of Europe, in contrast to his predecessor Margaret Thatcher. He negotiated the Maastricht Treaty in 1992, his proud claim being to have obtained opt-outs from the final stage of Monitory Union (adopting the EURO) and from the Social Chapter. As well as most of the Schengen (open internal border) Agreement. Indeed, at the time little more could have been achieved to protect the UK’s position, which differed from that of its Continental partners.
The Treaty introduced European citizenship, allowing citizens to reside in and move freely between Member States. It established a common foreign and security policy with the aim of “safeguarding the common values, fundamental interests and independence of the Union”, with close cooperation on justice and home affairs to ensure the safety and security of European citizens. The European Communities became the European Union on 1 November 1993, the new name reflecting the evolution of the organisation from an economic union into a political union.
The Referendum Party was formed in 1994 to contest the 1997 general election on a platform of providing a referendum on the UK’s membership of the EU. It fielded candidates in 547 constituencies at that election, and won 2.6% of the total votes cast, but failed to win a single parliamentary seat because its vote was spread out across the country.
In February 2016, the Conservative government of David Cameron under pressure from within his own party, negotiated “a new settlement for Britain in the EU” which was then followed by a referendum on the UK’s membership of the European Union in the United Kingdom and Gibraltar. The result was 52% for the UK to leave the EU. The new deal was discarded and the United Kingdom formally withdrew from the EU on 31 January 2020.