Cameron to Make EU Case to Commons as Johnson Backs `Brexit'

The One Question Brits Are Asking: In or Out?
  • Possible Cameron successor among most popular U.K. politicians
  • Pound falls most since 2009 banking crisis after Johnson move

David Cameron will make the case for staying in the European Union to Parliament on Monday after London Mayor Boris Johnson sent the pound plummeting by becoming the highest-profile figure to say he’ll campaign for Britain to quit the 28-nation bloc.

The prime minister will address the House of Commons at 3:30 p.m. on the reform deal he struck with fellow European leaders on Friday. The agreement is aimed at helping him to argue that Britain is better off in the EU going into an in-or-out referendum he’s called for June 23.

Boris Johnson in London on Feb. 22
Boris Johnson in London on Feb. 22
Photographer: Jason Alden/Bloomberg

That stance suffered a setback after Johnson, one of the U.K.’s most popular politicians and prominent Conservatives, said he’ll campaign for a so-called Brexit, putting himself in direct opposition to Cameron, his party leader. The pound fell the most since the 2009 banking crisis as investors woke up to the likelihood of an energized “Out” campaign.

“He is a superb campaigner, so he’s a good asset to the cause,” Nigel Lawson, a Conservative former chancellor of the exchequer who leads the Vote Leave movement, said in an interview on BBC Radio 4’s “Today” program. “What this is about is a declaration of independence by the United Kingdom. It’s about time we became a self-governing, independent democracy.”

U.K. assets are under pressure amid uncertainty over the likelihood of an unprecedented exit from the world’s biggest trading bloc. With polls disagreeing on the outcome of the referendum, concerns are also resurfacing over the possibility of Scotland’s secession from the U.K. in the event of vote to leave.

Sterling dropped to its lowest level in almost seven years against the dollar and weakened at least 1.2 percent against all its 16 major peers. The pound slid 2.1 percent to $1.4106 as of 1:26 p.m. in London, set for the biggest decline since March 2009.

Costing Business

“The dramatic fall in sterling today is driven by fear of Brexit and means that the threat of leaving is already costing British business,” Susan Kramer, economic spokeswoman for Cameron’s former coalition partners, the Liberal Democrats, said in a statement. “Imagine how much worse it will for British exporters if we withdraw from the world’s biggest single market.”

Britain’s Institute of Directors said the deal was sufficient for more than 600 of its members to vote to stay in. The EEF, which represents engineering, manufacturing and industry firms, said 61 percent its members want to remain in the EU.

“Companies, particularly those interested in exporting, do not see the point of the U.K. cutting itself off from its major market,” EEF Chief Executive Officer Terry Scuoler said in a statement.

The view from the business community contrasted with that of Johnson, who said Sunday that he’d vote to leave the EU “because I want a better deal for the people of this country: to save them money and take back control.”

QuickTake Will Britain Leave the EU?

‘Didn’t Happen’

As sterling tumbled, Johnson’s economic adviser Gerard Lyons, a former chief economist at Standard Chartered, denied Britain would be worse off outside the EU.

“In terms of all the pessimistic stuff being said at the moment, I’ve heard it all before and I heard it 15, 16 years ago at the beginning of the euro debate,” he told BBC Radio’s “World at One” show. “Then the City was very pessimistic that if Britain did not give up the pound and join the euro, both the U.K. economy and the City of London would be penalized and would suffer very badly, and as we know that didn’t happen.”

Citigroup Inc. put the probability of Britain exiting the EU at 30 percent to 40 percent, up from a previous 20 percent to 30 percent, as a result of Johnson backing the “Leave” campaign.

Johnson’s move was a second blow to Cameron after Justice Secretary Michael Gove, one of his closest political friends, announced on Saturday that he will campaign for an exit. Cameron had urged the mayor to stay on his side.

‘Pop-Star Charisma’

"He definitely has pop-star charisma and appeal,” Jacob Nell, a U.K. economist at Morgan Stanley, told journalists at a briefing in London. "If the ‘Out’ campaign get it right, they could appeal to both the anti-immigration and the deregulation group of voters and Johnson could help make voting for Brexit seem socially acceptable."

Johnson is among the favorites to succeed Cameron, who’s said he’ll step down as prime minister before the 2020 general election. It means much of the coming debate will be conducted, in public, between members of the governing Conservative Party.

“There’s enormous numbers of voters who are not sure what to do in this referendum,” Johnson’s biographer, Andrew Gimson, said in an interview. “Whether this will help them to make up their minds, I don’t know. But for people who want to feel good about voting to leave, Boris is good at making people feel good about things.”

A telephone poll carried out by Survation on Saturday showed 48 percent of respondents want the U.K. to stay in the EU, compared with 33 percent who would vote to leave and 19 percent who are undecided. In recent months, most phone surveys have shown double-digit leads for remaining in the EU, while online polls have had the race much closer, some suggesting the “Leave” camp is ahead.

No Going Back

Cameron’s spokeswoman, Helen Bower, dismissed the idea floated by some Brexit campaigners that there could be a new renegotiation and a second referendum if Britain votes to quit the EU on June 23.

"The process is set out very clearly in the treaties, a vote to leave is a vote to leave,” she told reporters in London. “If the British people vote to leave the government will clearly respect the outcome of that and launch the process.”

Her comments were supported by Alan Renwick of the constitution unit at University College London, who told “World at One” that no such option exists in the EU’s Lisbon Treaty. “It would be politically untenable for the prime minister to turn around and say, we’re going to wait and see,” he said.

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