No EU referendum! Unless there is one.

Photographer: Jason Alden/Bloomberg

U.K.'s Miliband Is Half Right on Europe

Marc Champion writes editorials on international affairs. He was previously Istanbul bureau chief for the Wall Street Journal. He was also an editor at the Financial Times, the editor-in-chief of the Moscow Times and a correspondent for the Independent in Washington, the Balkans and Moscow. He is based in London.
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Ed Miliband, leader of the U.K.'s left-of-center Labour Party, chose to give the opening speech of his formal campaign for the May 7 election to businesspeople at Bloomberg's London headquarters this morning. That suggests he knows his weakness: Fewer than 10 percent of business leaders think a Labour-led government would be good for them, and few voters trust Labour to run the economy.

In trying to win his audience over, Miliband articulated more clearly and forcefully than he has before the one serious enticement he has to offer the country's larger businesses: a commitment to stay in the European Union, though with a caveat.

QuickTake Will Britain Leave the EU?

This may sound counterintuitive -- Britons are famously dyspeptic about the EU and all it represents. Prime Minister David Cameron came to power pledging to end the Conservative Party's anti-EU obsession, only to promise a referendum on leaving for fear of losing voters. When Cameron made that speech in 2013, many were convinced Miliband would have to follow suit. But he resisted the stampede, and wisely so.

One reason is that Miliband can afford to be pro-EU. British ambivalence towards Europe doesn't make it a clincher for voters in national elections. A March poll found only 8 percent of respondents see Europe as an important factor in how they vote (as opposed to 38 percent who said health care, 31 percent the economy and 25 percent immigration). Cameron was trying to fix a particular problem in his party.

And although Europe may not sway voters, it can help Miliband with an issue that does: The Labour leader has real difficulty getting people to take him seriously as a potential steward of the economy. Maybe it's his manner, or the memory that his party was in charge when the economy melted down in 2008, or the fuzziness of his fiscal math -- or all of the above -- but only diehard Labour supporters trust him with their money.

If Miliband wants to make swing voters less wary, it helps for the business community to take him seriously. He can't do that by offering business a better tax regime (he plans to squeeze them), or lighter regulation (they wouldn't believe him). He can, however, offer the added stability for planning and investment that would come with taking Cameron's 2017 referendum off the table.

Miliband should take this to its logical conclusion. As an audience member pointed out, Labour has promised an EU referendum of his own if new powers are to be transferred to the institutions in Brussels by treaty. A number of EU members have similar clauses written into their constitutions, but Miliband's promise is different: Any vote would not be on the treaty change in question, but -- like Cameron's -- on membership itself.

I think that's a mistake, in part because it undercuts Miliband's pitch to business: The one thing that carries a greater risk of a so-called Brexit than Cameron's proposed 2017 referendum is the same vote held under a Labour government.

That's because Cameron has promised to campaign in favor of staying in the bloc, so long as the EU has been "reformed". If Miliband wins election and a few years later has to call a vote on a new EU treaty change, the next Tory leader would very likely campaign for a British exit. He (or it could be she) would face an incumbent Labour Party that may well have messed up the economy and grown unpopular. The vote would become a referendum on the government, as EU-related plebiscites so often do, and that rarely turns out well.

Miliband has found a way to start repairing his reputation on the economy, so he should stick with it.

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

To contact the author on this story:
Marc Champion at mchampion7@bloomberg.net

To contact the editor on this story:
Christopher Flavelle at cflavelle@bloomberg.net