Framing the referendum

As David Cameron puts Europe to the public, I explore the predetermined nature of the referendum, and question how much choice is actually involved.

There are few things that have divided public opinion more over the past two decades than our relationship with Europe. But come 2017, a 'No' vote on the EU is extremely unlikely, because politics is a manipulative game, and David Cameron has already set to work on framing the referendum.

I rarely venture into the world of politics, and I should outline from the start that I don’t intend on making a case for or against our involvement in the EU. But when the question of a referendum arose I felt compelled to analyse how much public choice is actually involved in such issues.

The front page of the Economist this week (below) suggests that an EU vote would be a gamble on Mr Cameron's behalf. With France and Germany warning the UK against pursuing an "a la carte" approach, he declared: "We will give the British people a referendum with a very simple in or out choice", dangling a carrot on a stick in front of UKIP and all those with a phobia of Europe.

But in this case I would argue that, if it came to a vote, Mr Cameron would be safe.  Not because the public overwhelmingly supports our involvement, but because ultimately, they don’t have that much say in the 'ultimate public choice'.  

-      History tells us so

Referendums have been proved to be the most effective way of keeping the status quo. Most recently, 10 out of 11 cities in England voted to keep local governance as it is, with Doncaster voting to retain its decade-old mayoral system and Bristol the one outlier which voted for change. The alternative vote referendum in May 2011 came and went without change, with only 10 UK areas out of 440 voting in favour of AV.

In March 2011, Wales voted to extend the law-making powers of its national assembly in one of the few votes that instigated a change. But although this simply extended existing Welsh assembly powers and was supported by all four established parties in Wales.

There are two explanations why we generally oppose change. One is that our voting patterns are a variation on the 'loss aversion' theory, where people chose to avoid loss rather than making gains. But the other more likely explanation is that changes proposed in a referendum only go through when they are backed by a coalition and most/all the major parties.

-      Never in the heat of the moment

Referendums, just like marital arguments, are debates best settled after the parties involved have had chance to sleep on it, but in politics the 'cooling period' is often used as a way of sweeping issues under the carpet.

The future of Europe is hazy at the moment, which is why Mr Cameron has delayed the vote. In that time he will be able to complete the necessary political manoeuvring in Brussels and woo the electorate into believing that it is in Britain's interest to remain in a reformed EU. Having already declared that if he can secure changes he will argue in favour of staying in, I simply need to refer you to my previous point.

"Because I believe something very deeply. That Britain’s national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it." – David Cameron

-      Unnecessary risk?

It is hard to say from an economic perspective whether Britain will be better off in or out of the eurozone, although general consensus often sides with more inclusion as being the most secure route to growth.

What can be said for certain is that financial markets have become wholly dictated by sentiment, and rocking the boat in 2017 will do nothing but damage economic prospects. Speaking on the BBC's Hardtalk programme, Mr El-Erian - who heads the world's biggest investor in bonds, based in California - said the UK would "certainly suffer the consequences" if it exited the EU, including lower growth and lower investment.

But he said the uncertainty generated by the possibility of an EU exit years in the future would also be damaging."People like us start putting in an uncertainty premium," he said, which would deter investment.

With Obama pushing for closer collaboration in Europe and most big businesses asking for it too, simply asking the question come 2017 could be enough to deeply unsettle the markets, no matter how framed the eventual outcome may be.