In January last year, British Prime Minister David Cameron delivered a speech on the EU that he hoped would appease the conflicting factions within his party — those that saw Europe as essential to Britain’s long-term prosperity and those that viewed it as the albatross around the nation’s neck, holding it back with red tape and restraints.

Pledging a referendum on the UK’s membership of the EU by the end of 2017 after negotiating the return of some of the country’s powers to the national parliament, he said he would fight with all his “heart and soul” to remain in the EU. “Britain’s national interest is best served in a flexible, adaptable and open European Union,” he concluded, pointing to countries such as Norway and Switzerland that had to negotiate access to the market “sector by sector”.

The combination of offering a referendum while at the same time appearing to stand strong on Britain’s interests would enable him to satisfy both wings of the party in a way that neither Margaret Thatcher nor the last Conservative prime minister John Major had been able to. Undoubtedly, he also had in mind former Labour prime minister Harold Wilson’s success in the mid-1970s of, first, successfully renegotiating some of the terms of Britain’s entry o the European Economic Community and then holding a referendum on EU membership in which over two-thirds supported remaining in the union.

Wind forward 21 months, and it’s a very different picture. Cameron’s gamble back in 2013 is backfiring, with the political debate in the country firmly swinging against EU membership, forcing the prime minister into an increasingly anti-European stance. Just last month, following Scotland’s vote against independence Cameron pronounced on the BBC that he felt “a thousand times more strongly” about the United Kingdom than the European Union.

Changed scenario

Recent speeches have dwelt little on the pros of EU membership and much on its perceived problems. In October, David Cameron insisted that only British people were his “boss” following criticism from the outgoing European Commission president, insisting their concerns were not unreasonable. “They want this issue fixed, they are not being unreasonable about it, and I will fix it,” he said.

There have been a large number of factors at work of course, but the biggest one is undoubtedly the anti-immigration, anti-EU UK Independence Party. Like other rightwing parties it made strong gains in the EU parliamentary elections over the summer, winning just over 28 per cent of the vote in Britain, with its support base concentrated in areas of high unemployment outside the capital.

The party recently got its first Westminster parliamentary seat after a former Conservative MP beat his old party in a by-election in early October. They stand a good chance of winning another seat in another by-election in November in the constituency of Rochester and Strood. According to a survey conducted for The Independent newspaper earlier this week, support for the once-fringe party has surged to 19 per cent, while a third of people polled said they believed the party offered a “realistic alternative political vision”.

The UKIP bugbear

UKIP’s rhetoric has had Britain’s mainstream parties on the backfoot, with the substantial public support they have garnered making the Conservatives as well as Labour reluctant to dismiss many of the “concerns” they have raised, both about (EU and non-EU) immigration into the UK and EU membership. It is noteworthy that when the Defence Secretary warned that immigrants were “swamping” some British towns, (he subsequently retracted his remarks) a Labour spokesperson simply dismissed his comments as a case of electioneering before the by-election.

The Labour party did not challenge the anti-immigrant presumptions on which his remarks were based. (That the concerns about immigrants have little basis in reality was highlighted this week in a study conducted by journalists at the London daily City AM who found that UKIP was at its most popular in areas of low immigration.)

UKIP has also cornered the Conservatives into adopting an increasingly hectoring and aggressive tone when it comes to Europe.

A recent demand from the European Commission that Britain pay a further €1.7 billion into the joint coffer is a case in point: following revisions to the way British Gross National Income was calculated over a 12-year period, it emerged that Britain had performed better than expected and, according to terms it had previously agreed to, had to step up the additional payments, alongside a number of other member states (others that had overpaid such as Germany were told they were owed a rebate).

Making it worse

Cameron’s reaction was to express his “downright” anger with the Commission, and state that the demand was “totally unacceptable”. Coming days after he pledged to take steps to curb migration from within the EU (going against one of its founding principles) his comments only served to alienate him further from other European leaders. Leaders such as German Chancellor Angela Merkel who have, to date, been patient with Britain’s stubbornness on a number of EU issues, have expressed their firm opposition to the plans to curb migration. Outgoing EU Commission president Jose Manuel Barroso told a gathering at Chatham House in London last week it would be a “historic mistake” for Britain to continue to alienate its natural allies within the EU by questioning principles at the very heart of the union.

Far from heading off the UKIP-challenge, the British government’s strategy has only exacerbated it as politics continues to shift rightwards and away from Europe.

Much will depend on the general election next year. Conservative hopes of bringing in legislation that would guarantee a referendum in 2017 have been dashed (the Bill collapsed on Monday following opposition from the Conservative’s coalition partner, the Liberal Democrats). However it is far from the end of the matter: the Conservatives could still press ahead with the referendum if they score an outright victory or reach a deal to hold one if they were once again in a coalition government.

Overall, the situation is bad news for the 700-odd Indian companies that have chosen to make Britain their European headquarters — many on the presumption that it has been and will remain a tariff-free gateway to the region. While EU membership might not wholly determine the huge affinity that high networth Indians have for the London property market, businesses are likely to take a harsher view, particularly given the uncertainty in the run-up to a referendum.

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