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The referendum will be held on the 23rd June 2016 and the British public will be asked to vote on the following proposition:

“Should the United Kingdom remain a member of the European Union or leave the European Union?”

The Brexit referendum was born out political necessity for the Conservative Party. The Prime Minister, David Cameron had to unify his party over Europe before the general election of 2015 and to prevent the drift of Eurosceptic voters to the anti-EU and populist part, the United Kingdom independence Party. In 2013, David Cameron promised a referendum on membership of the EU and pledged to re-negotiate the terms of the UK’s membership of the EU.

The debate to leave or remain in the EU is taking place after 8 years of austerity politics, in the midst of a migration crisis, which has had an impact on several EU members and the recent fallout of the Grexit Euro crisis. This has contributed to public opinion on the EU, which is equally divided between leaving and remaining in the EU.

It is interesting to note that the UK is dividing along demographic and geographic lines on the issue of Brexit. In a recent survey, the geographic areas most likely to vote to remain are London, Scotland, Wales and Northern Ireland, where 60/40 are for staying in the EU. This contrasts` with provincial England outside London where the divide is 53/47 for leaving.

The demographic divide also indicates that under 30’s divide 73/27 in favour of remaining while the over 60’s are 63/37 in favour of leaving. This may present a problem for the remain campaign as the under 30’s are less likely to vote in the referendum.

In terms of the work force, the statistics are interesting. The managerial and professional segment of society, the social class A/B are 62/38 in favour of remaining, while skilled and semi-skilled are 63/37 in favour of leaving.

The main issues dividing the public are centred on immigration, cost of Brussels, sovereignty and trade.

The immigration issue is divided between the EU and non-EU immigration. The leave campaign has tried to connect the free movement of people in the EU to security risk in the UK, even though the UK is not a member of Schengen Area. The Brussel terrorist attack on 22 March 2016 and possible accession of Albania, Serbia and Turkey to the EU, has made this an issue.

The EU migration, of which there are 3 million EU residents in the UK, has also raised issues of the pressure on schools, hospitals and social security benefits, particularly to children who remain in their home countries. This has been described as “benefit tourism”. There are 3 million EU residents in the UK. There is evidence that many of these fears are more perception than reality as a study has found that EEA immigration in the decade up to 2011 contributed 34% more in taxes than they received in benefits.

Another major issue absorbing the attention of the public is the cost of Brussels. According to British Government figures, the UK net contribution was £8.8 billion in 2015, which was less that the UK received in benefits from the EU. The leave campaign point out this vast sum could be better used to support public services and infrastructure projects. However, the Confederation of British Industry (CBI) estimated that the UK benefits by between £62 to 78 billion a year from being a member of the EU.

Trade and sovereignty are also issues on which there has been much discussion. The EU is currently the UK’s biggest trading partner, accounting for 44.6 per cent of UK goods and services exports, which has a value of £226.7 billion. However, there is a large trade deficit with EU imports exceeding UK exports to the EU by about £77 billion. Despite this deficit about a third of FTSE 100 CEO’s support remaining in the EU. The main thrust of the leave campaign is that EU rules and regulations suffocate entrepreneurs and leaving would allow the UK to negotiate free trade agreements with high-growth parts of the world such as India and China. This is argument is highlighted by opposition to the EU from Sir James Dyson of Dyson Vacuum Cleaners, who believes that the EU is opposed to new technologies and is protectionist. However, there is no certainty on what the outcome of these negotiations would be. In addition there are concerns that if the UK left the EU it would be cease to be the top destination for Foreign Direct Investment which in 2014 accounted for $72 billion. In the City of London, opinion seems divided between the large corporates for remaining because of the Single Market and the smaller firms arguing that London would thrive if it no longer had to comply with EU regulations and become more like Singapore or Hong Kong.

On the issue of sovereignty, there is an argument that the EU makes the UK less democratic because the UK parliament has to accept legislation from Brussels. Recently, the former Prime Minister, John Major said that the only truly sovereign country was North Korea, his argument being that all countries have to compromise on decision making, just as the UK does with other organisations such as NATO, UN and through treaties and conventions such as the Convention on Human Rights. In addition, there is some argument that the nation state in today’s world lacks the power and resources to confront complicated geopolitical issues and therefore have by force to collaborate with other countries.

In conclusion, the current geopolitical issues of immigration, terrorism, economic austerity and Euro instability, has created a divided UK on the issue of the EU. There is public sentiment that it would be best to go it alone and pull up the drawbridge between Britain and the rest of the world. However, this is balanced against the uncertainty of the UK economic future if it left the EU without any idea of where it would end up. It may find itself on leaving the EU between a rock and hard place with no safe harbour.

Domenic Pini (Pini Franco LLP)

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