U.K's Sleepwalk to EU Exit Gets Rude Awakening

UKIP's election successes this week are a wake-up call to Westminster to prevent the U.K. from sleepwalking out of the European Union. 
A future in government?

The U.K. is sleepwalking toward a departure from the European Union, much as it almost lost Scotland in a vote on independence last month. At meetings with business leaders during the annual conferences of the three main political parties in recent weeks, the risk of a "Brexit" was by far the most-discussed topic.

At last week's Conservative Party conference, a senior executive of Royal Dutch Shell, Europe's largest oil company, explained to me how the U.K.'s political timetable is becoming a deterrent to investment. A national election set for May 2015 is wide open; there's a non-negligible risk of a referendum on quitting the EU in late 2017; and the additional danger of a yes vote to exit, followed by a couple of years of wrangling and untangling as Britain struggles to redefine its place in the world.

That, said the Shell executive, who declined to be identified for this article, spells five years of potential confusion and uncertainty -- which is five years too many for anyone mulling the choice between building or expanding a factory in the U.K., and looking elsewhere in Europe. In two special elections yesterday, the U.K. Independence Party campaigned on a manifesto of relentless anti-Europeanism. It won its first seat in Parliament in the town of Clacton in the early hours of this morning. It also took almost 39 percent of the vote in the constituency of Heywood and Middleton, slashing Labour's share to about 41 percent from an anticipated 47 percent in an Oct. 6 poll.

UKIP's ability to take votes from both of the major parties is evidence that its message is chiming with voters -- but that's more due to a tough stance on immigration than the EU. In May, immigration displaced the economy as the issue thought by voters to be the most important facing the country, according to an ongoing series of polls by YouGov:


Prior to that, the economy had been the top topic ever since June 2010, when it topped the poll with 80 percent. Europe hasn't scored more than 23 percent in any of this year's YouGov issues polls, with housing and health consistently taking third and fourth place in the surveys.

UKIP, though, has tapped into disquiet among British voters about hordes of Europeans flocking to the country to claim welfare benefits (untrue, but easy meat for inflammatory newspaper copy), and comingled it with Britain exiting the EU. If Britain's leaders don't start addressing the former, they'll lose the argument on the latter.

Prime Minister David Cameron said last week that immigration will be "at the heart of my renegotiation strategy with Europe." Politicians need to start arguing in favor of the economic benefits that immigration brings, as well as acknowledging that the targets the government has set for reducing net inflows of people are counterproductive, because they are unachievable, and should be abandoned.

The lessons to be learned from the Scottish independence referendum are that it's never too early to start campaigning, and that accentuating the positives of an argument is a superior strategy to scare tactics that stress the negatives. UKIP's election successes this week are a wake-up call to Westminster.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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