Cameron gambles on the status quo in EU referendum

European Union

“Why would you trust a man about the European Union if you can’t trust him on his own tax affairs?” The comment from Ian Davidson, one of the few Labour MPs campaigning for a no vote in June’s referendum, was succinct and right on the money.

David Cameron’s reputation has suffered as a result of the failure to come clean from the start about how he benefited from the offshore trust fund set up by his father. What’s more, the revelations in the Panama Papers come at a time when the credibility of the prime minister will matter immensely.

Here’s the position. The government has a tried and tested model for winning over the public in key electoral tests. It makes a case for the status quo, argues that the alternative is fraught with danger and relies on the innate conservatism of voters to carry the day. It worked in the Scottish referendum; it worked in the 2015 general election; and the bookmakers think it will work again on 23 June.

The idea is to nag away, to keep pointing out the threats to jobs and investment, in the belief that undecided voters will eventually conclude that the risk is simply not worth taking. The approach is not glamorous. It is not romantic. But it has proved quietly effective.

Cameron’s line on the EU poll has been consistent ever since the renegotiations were wrapped up in February. Look, he has said, I am no great fan of Europe. I opposed Britain joining the euro and would never contemplate giving up the pound. Europe needs to change. But those proposing Brexit are ignoring the dangers and the costs of leaving. Divorce will be long and protracted. A better option would be to stay in and fight for a reformed Europe rather than walk into the unknown.

This strategy is far from perfect. It glides over the fact that the economic performance of the eurozone has been dismal, with unemployment still above 10% and growth - such as it is - dependent on negative interest rates and large dollops of quantitative easing from the European Central Bank. The eurozone will continue in this zombie-like state until one of two things happens: it breaks up or the countries using the single currency decide that they have to integrate further in order to make it successful.

Cameron knows this. He is aware that Britain’s continued membership of the EU will continue to be a live issue if the eurozone stumbles from crisis to crisis in the next decade. That’s why he and his ministers have focused so tightly on the short-term, on the transitional costs of exit.

This makes sense. For a start, it is obvious that there will be financial turmoil in the event that Britain votes to leave on 23 June. Indeed, the turbulence will probably start before the referendum if the opinion polls suggest the government’s gamble has failed.

Business confidence will take a hit and investment decisions will be mothballed. Consumers will find that a falling pound means imported goods are more expensive and that they have less to spend when they go abroad. Growth in 2016 and 2017 will be lower.

The Brexit camp has not really worked out a way of countering this. One option is to deny that there will be any economic fallout and that life will go on merrily as before. This was the approach tried by Alex Salmond in the Scottish independence referendum.

Another is to admit that there will be a shock to the economy but that it won’t last long. Britain will renegotiate a trade deal with its former EU partners but will do more business with those parts of the world that are thriving rather than stagnating.

The failure to spell out how the UK will cope during this period has been a key weakness for the Leave campaign, which has been pretty unconvincing when pressed about what sort of arrangement there would be with the EU after independence. Voters might not know the difference between the Norwegian, the Swiss, the Canadian and the WTO options, but they know when politicians are winging it.

In the circumstances, the Brexit camp can hardly believe its luck.
Cameron’s approach only works if he is trusted, if his version of the future is more believable than those of his opponents. The experience of the last EU referendum in 1975 shows that the prestige of the prime ministerial office should not be under-estimated. Barbara Castle, who was campaigning to leave, recorded in her diaries how voters in her Blackburn constituency were happy to take their lead from Harold Wilson, who wanted to stay in.

So when the government’s glossy leaflet is delivered to households this week, the Brexit campaign has a ready response: it is simply another dodgy dossier from a man who is not to be trusted. Cameron has spiked his own big gun.

For the first time, the prime minister’s approval ratings are lower than those of Jeremy Corbyn, and he will need help from the Labour leader to secure enough votes to win on 23 June.

The idea that the prime minister can count on the full-throated support of Corbyn seems a bit improbable. The leader of the opposition has never been a fan of the European Union, warned that the single currency would be a job-destroying machine, and would almost certainly be in the Brexit camp were it not for the fact that he was chosen to succeed Ed Miliband.

Nor does Corbyn owe Cameron anything personally. If you are going to rely on a political rival for help, it is not the smartest idea to tell them at prime minister’s questions to “put on a proper suit, do up your tie and sing the national anthem”. If Corbyn is thirsting for revenge after being treated with such disdain, few would blame him.

The experience of the Scottish referendum also suggests that Cameron’s gratitude for any support received will be shortlived. Miliband strongly supported the Better Together side only to find that within an hour of the vote being announced the prime minister was challenging Labour to back “English votes for English laws”, something designed to add to the opposition’s discomfort north of the border.

Cameron’s approach is that favoured by defenders of the status quo down the ages: change is dangerous. More often than not, it proves to be a successful strategy. But not always. The status quo would have meant Lord Halifax rather than Churchill as prime minister in 1940 and Churchill rather than Attlee in 1945.

Corbyn was the change candidate, not the status quo candidate when he became Labour leader. He is well aware that the tactics used by Cameron to fight the referendum will be used against him in 2020. Expect him to let the prime minister squirm for a bit.

Powered by article was written by Larry Elliott Economics editor, for on Sunday 10th April 2016 12.50 Europe/ © Guardian News and Media Limited 2010