Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics
Britain has long been ambivalent about the European Union (EU) and Britons' low regard for the EU has been exacerbated by the euro crisis. British prime minister David Cameron has said two things. There will be a referendum on Europe before the end of 2017. But before that, Cameron promises to renegotiate Britain's relationship with the EU. Putting these two promises together, the referendum may be less important than one might think.
In renegotiating his country's relationship with Europe, Cameron will in any case loosen ties with European partners. He has already refused to go along with various reforms of financial regulation that the EU has been pursuing. He will exercise Britain's right to opt out of various judicial and police agreements. So some distancing of Britain from Brussels is inevitable, even if Britons decide not to leave the EU when they vote in the referendum.
If Britons do vote to leave the union, the additional distancing may not be that significant. Britain will remain part of the free-trade area even if it is not part of the EU, mimicking the status of Norway or Switzerland. It will be able to negotiate bilateral agreements with the European Union relating to movements of people or technical barriers to economic integration. And Britain will continue to be a voice in European policy on issues where its weight makes it impossible to bypass, most notably in finance. In sum, what seems like a make-or-break referendum may actually be less than that.