17 December 2015

As we documented in today’s Daily Shakeup, a number of EU leaders have gone on record ahead of the EU summit to express their willingness to work with and help the UK in terms of the reforms it is seeking but are not willing to countenance discrimination (more on exactly what this means below).

There is a huge amount of noise around the summit so it is hard to discern exactly what the mood is amongst the leaders, though there is undoubtedly some frustration. For the UK’s part, far from dreading this Summit, I think Prime Minister David Cameron may well be relishing the opportunity for a real political negotiation over his demands. Rightly or wrongly he seems to believe he can convince EU leaders of what he wants and provide a political impetus to the negotiation which can overcome the hurdles and blockades which officials and lawyers have been putting up.

While the focus will undoubtedly be on the UK’s demands to limit access to EU migrants’ access to in-work benefits the other demands should not be forgotten. In actual fact, they could prove to be more important, particularly from a longer term perspective and when it comes to actually making any kind of real change in direction to the EU and the UK’s position in it. Their importance to the public should also not be underestimated. Our poll with ComRes earlier this week showed that failing to get safeguards for the UK against spill over from the Eurozone could lead to an 11% swing to the Leave side – higher than any of the PM’s other demands.

Where do we stand on the Economic Governance demands?

As we have noted before, there is broad agreement on the need for safeguards for non-Eurozone states but the devil will be in the details. The discussion could look at some potential options for achieving this. In his recent letter Tusk mentioned some “mechanism” but even behind the scenes details are vague. A political discussion or framework for how this mechanism could look and how far it could extend might provide scope for more detailed proposals ahead of the February Summit. The main concern from Eurozone states will be that any mechanism does not hamper their own plans and does not amount to a veto for the City of London on financial issues.

The other key or controversial issue in this bucket is that of formally recognising the EU as a ‘multi-currency union’, as proposed by Open Europe. Some Eurozone states are cautious about this as it may have implications for other states joining in the future, though as we have also noted, this looks some way away for many states. Additionally, the ECB has begun voicing concerns about this point. While it is not directly party to the negotiations, the Eurozone is likely to listen carefully to its view.

Where do we stand on the Competitiveness demands?

This has been the most nebulous part of the reform package and the main question has always been – what can the UK add to what is already being done? There have undoubtedly been some improvements under this Commission, though a huge amount of work remains to be done. As explained on the blog previously, one option for expanding this area would be to propose some more specific measures to implement ‘subsidiarity’ (the idea that policy should be national where possible, European where necessary) which was touched upon in Cameron’s letter. A further idea which is under discussion is for a strict target on reducing regulation and targets to make progress on liberalising the cross-border market in services. This is also something Open Europe has long argued for – see here for more details.

Where do we stand on the Sovereignty demands?

As we noted in our EU Reform Heat-map there is some support for measures such as a ‘red card’ for national parliaments and an end to ‘ever closer union’ for all members. Such changes can be viewed from the EU-wide perspective of a serious democratic deficit and rising populist forces. The question remains where the threshold for activating a red card for national parliaments would be set. Discussion so far seems to have focused on turning the orange card (which requires half of national parliaments) into a red card. As we noted in our recent report on this, we do not think such an approach would amount to much. As such there could be some tensions over this at tonight’s Summit if the UK sticks to its guns on this point.

On ever closer union, Cameron has requested an opt-out for the UK. The question remains exactly how this can be constructed and what impact it would have. These issues are unlikely to be too controversial to most states, though a couple who have a very federalist vision of the EU may take some offense.

Where do we stand on the immigration demands?

This area is likely to see the most heated exchanges. What is clear is that other member states are extremely resistant to proposals to deny access to in-work benefits that would discriminate on the basis of nationality. However, Cameron is likely to make it clear that this is an area where he needs reform in order to convince undecided voters (particularly Conservatives) to back his reform package (see our poll), so the question is what might form the basis of a compromise? There has been lots of speculation but talks could focus on different ways of restricting access for new arrivals which would indirectly rather than directly discriminate (there are other examples of this in the EU, such as Danish restrictions on ownership of second properties and the ability to apply strict restrictions on the access to student maintenance grants to EU nationals). The migration basket is also likely to feature a package of measures on other issues such as the level of child benefit that people can send to children abroad and how long people retain their residence rights without having a job.

I’d expect discussion on this topic to draw more heat than light, but they could lead to an agreed set of political and legal parameters which could form the basis of a compromise before the February summit.

What outcome to expect from this Summit?

It’s hard to know what the output of all of this might be. There will undoubtedly be something in the conclusions about continuing a positive discussion, but Cameron will want it to be more than that. The aim will be to have a clearer political framework and agenda, within which officials can propose solutions to how to achieve the goals laid out by the EU leaders. However, the prospect of single text and consensus view being agreed seems a bit out of reach just yet. As such, the most likely outcome is a discussion, probably heated in parts, resulting in some red lines and broader outlines of what leaders can accept. Then, between now and February, officials will work on different measures to reach these goals, though that itself is far from a simple process. There is no guarantee that this would be a sufficient outcome for a final deal in February, though that remains the target.