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'Eurosceptic' Voices Getting Louder in UK

Wednesday, 2 Nov 2011 | 10:43 AM ET

As the euro zone lurches from summit to summit, disgruntled Eurosceptics in the UK are becoming more visible.

Big Ben
Don Klumpp | Iconica | Getty Images
Big Ben

The clamor for a referendum on the UK's European Union membership has grown louder, and one politician from the ruling Conservative Party has produced a 'Plan B' for the UK's relationship with Europe.

Euroscepticism – opposition to the UK's membership in the European Union – is a grand tradition for much of the British right wing. Chief among their grumbles is the perceived loss of powers to mainland Europe. As the storm clouds over the euro zone gather, their voices get louder.

"It's a combination of the euro crisis and the fact that things are much tighter for people," David Campbell Bannerman, Conservative member of the European parliament, told CNBC.com. "There's always been a general euroscepticism, but it has hardened."

Prime Minister David Cameron suffered the biggest rebellion of his time in power last week, after Tory MPs, including several with government jobs, voted for a national referendum on the UK's membership of the European Union.

Nick Clegg, Cameron's deputy and leader of the pro-EU Liberal Democrats, said Sunday that it would be "economic suicide" if the UK edged out to the fringes of the EU.

On Wednesday, Andrew Tyrie, the head of the Treasury Select Committee, an influential committee of MPs, wrote to Chancellor of the Exchequer George Osborne raising concerns about the proposed Financial Transaction Tax, a planned extra tax on financial transactions within the EU, which many in the UK fear would disproportionately hit the UK's financial services industry.

"There has been an awful lot of sound and fury, but they have not got a lot for it," Phillip Souta, director of Business for New Europe, (BNE) a lobbying group in favor of the UK's continued involvement in Europe, told CNBC.com. "The Tory rebellion was a 5-to-1 defeat rather than a victory. The bottom line is, jobs and growth and stability in the euro zone are totally in our interest."

One of the reasons Tory backbenchers are so restive could be because of the nature of the coalition government itself – because there are fewer ministerial jobs to go around, as they have to be shared out with the Liberal Democrats, there are more ministerial hopefuls warming the backbenches.

Campbell Bannerman, a former member of the extremely Eurosceptic UK Independence Party (UKIP), believes that Britain should abandon membership of the European Union and establish a new UK/EU Free Trade Agreement (FTA).

Plan B - Leave the EU?

He outlines his ideas in a pamphlet, written in conjunction with anti-EU, libertarian group the Freedom Association, called, "The Ultimate Plan B: A Positive Vision of an Independent Britain Outside the European Union."

The proposals would remove the UK even further from the EU than Norway and Switzerland – both of which are not part of the EU but members of the European Free Trade Association.

"It's just cleaner to have a (free trade agreement)," Campbell Bannerman said. "There's a lot of regulation that we can't stop and we don't really have a lot of influence in the EU with 72 out of 736 (members of the European Parliament)."

He also argues that the British people should be able to vote on membership of the EU, although he acknowledges that if there is a referendum, it won't come until after the next election, due in 2014-15.

"The British people only ever wanted trade – not takeover. People are starting to take notice of how much it costs to be a member of the EU," he said.

Statistics are bandied about by both sides.

Eurosceptics claim that the UK made a net contribution to the EU of more than £6 billion in 2008 – using official figures based on transactions between transfers of funds between EU institutions and the UK economy. However, when contributions to the UK from parts of the EU such as regional development bodies are taken into account, that figure falls to £2.7 billion.

The two sides disagree violently on how much EU trade means to the UK. The EU is the UK's biggest external trading partner, although Eurosceptics argue that this is distorted by the so-called "Rotterdam Effect," where some UK exports and imports are routed through the Dutch trading port and recorded as EU trade rather than trade with the destination nation.

There are also fears about EU legislation like the Temporary Workers Directive, which grants greater rights to casual staff, and the Working Time Directive, which sets a certain number of working hours per week, affecting the UK labor market.

Immigration from the newer EU member states, such as Poland and Romania, has become a focal point for the British right wing.

Those in favor of the UK's involvement in the EU argue that there are plenty of other economic benefits to the UK from having a seat at the EU table. Also, when you have a net debt of £966.8billion, as the UK did at the end of September, EU contributions seem like a drop in the ocean.

Souta said that around a quarter of all foreign direct investment in the EU comes through the UK, as a result of its place as a gateway to the EU.

He pointed out that EU membership means that it is much easier to move workers around Europe, which is attractive to international investors in London.

"A lot of banks use just that system which membership of the EU gives, which you wouldn't get as a member of a Free Trade Agreement," he said.

"The government is not going to battle the EU over minor changes such as the repatriation of social and employment laws. A special deal for Britain is never going to happen."