The Clash

Should they stay or should they go?

That’s the question Great Britain’s Prime Minister David Cameron wants UK voters to decide. In a speech originally slated to be given in Amsterdam last week, Cameron proposed an in-or-out referendum to be held after the next general election in the UK and after he negotiates the return of some powers from Brussels to London, such as determining holidays or setting limits on the work week.

He spoke at Bloomberg LP’s London office—a remarkable place from which to announce a policy initiative. He said that public disillusionment with the EU is at an all-time high. And while the public may not consider Europe to be a hot button issue, there’s still a lot of Euro-skepticism: in a recent UK poll, 40% of those questioned said they would vote to remain in the EU, while 34% said they would rather leave.

Because while the 17 nations that have the Euro as a common currency are becoming more deeply integrated, the demands of global competition raise significant questions for the 10 non-Euro EU members. For example, eleven Euro nations are moving forward in adopting a financial transaction tax, something that Cameron’s government adamantly opposes. But capital is highly mobile—don’t they need uniform rules?

It’s a little strange to see Great Britain questioning its EU membership—something they only achieved in 1973 after 15 years of petition. They are now Europe’s third largest economy and the sixth largest in the world. De-coupling from the many trade and financial ties they have with the Continent would be an economic disaster.

And yet: there’s clearly something distasteful about having distant bureaucrats decide the details of your personal life. We see it here when people complain about Washington. And it’s particularly galling to see Cameron labeled a “scaredy-cat” because he wants to offer Britons a referendum regarding what could be the most important policy decision of their lifetimes.

But one thing Cameron has achieved: Germany and France are now united. They despise him.

Douglas R. Tengdin, CFA

Chief Investment Officer

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