Is the UK drifting away from Europe?
In the past elections for the European Parliament, nationalist, populist and anti-European right wing parties gained substantial strength. The Front Nationale in France, led by Marie Le Pen won the French vote by a strong margin; in Germany the populist, anti-Euro AfD (Alternative für Deutschland) made it into the European Parliament and in the UK the United Kingdom Independence Party (UKIP), led by the charismatic and ever laughing politician Nigel Farage, left the Labour and the Conservative Party behind with 27.5% of the votes. On the left side of the political spectrum, leftist anti-Euro parties made their stand in Italy, Greece and Spain.
After years of economic instability, harsh fiscal policies and uncertain future developments the European voter seems to be tired of the grey, impersonal and bureaucratic European system led from Brussels. This system appears to them as not representative of their best interests. In Britain this sentiment has already been especially strong, even before the 2009 financial crisis. Given this political pressure the British Prime Minister David Cameron had already offered an in/out EU membership referendum for 2017 as a way to ensure his reelection next year. This development has made some companies nervous: In 2013 Ford and BMW warned against a move for the UK’s withdrawal from the EU, they have insisted on the devastating effects such a decision would have on the UK’s economy. In 2013 the British Chamber of Commerce found that only 18% of British companies were in favor of a withdrawal from the EU.
These developments are most probably detrimental for the international investor’s view on potential business in the UK. The political and economic consequences of a withdrawal from the EU are not foreseeable. As anybody who wants to spend a good buck will realize, an unforeseeable political and economic development is a scary scenario. Would Britain be able to tap into the European market as easily as it does nowadays being a rogue European country? How would other European countries react? Would they impose sanctions on the UK? Would this have a significant impact on the continent, empowering radical, nationalistic parties that would undermine the achievements of the past decades? Would such a move force Scotland into independence? Who knows? Maybe such a step would release a great wave of renewal through the shaky Union making it dynamic and more resistant.
Any investor interested in getting into the game in the UK will have to follow these developments quite closely. Cameron’s hesitant reaction to UKIP’s victory in the EU elections reveals great anxiety; probably because it shows that the right wing potential in the UK is higher than anybody expected and secondly because a strong UKIP would steal the votes necessary to reelect Cameron’s Conservative Party. Would Labour follow through with a referendum? Rather not. Maybe UKIP’s victory will mean that the UK will stay in the EU after all. Therefore it is rather difficult to assert if the UK is drifting away from Europe; but it will certainly be a question to remain vigilant.