In Davos, Concern About Britain’s Status In EU, Income Inequality
Britain And The EU: An Unhappy But Necessary Marriage
In a speech on Wednesday, British Prime Minister David Cameron cited low public support as one reason to hold a referendum on his nation’s future in the European Union. Ironically, Deputy Prime Minister Nick Clegg appeared on BBC Television following the speech to argue in favor of remaining in the EU.
Reuters reports that Clegg told the BBC that an “ill-defined renegotiation of our place in Europe is not in the national interest because it hits growth and jobs.”
Concern over the impact of leaving the EU is shared by businesses, who fear not only of what it will mean for the economy, but that a departure will stymie foreign investment. British financial analysts in were in Davos, Switzerland for the World Economic Forum called on Britain to remain steadfast.
“The U.K. needs to remain very much part of the EU, but I can completely understand why Prime Minister Cameron thought it necessary to offer the people a referendum. Europe is changing and as the biggest country in Europe outside the euro zone its relationship is going to change,” Peter Sands, chief executive officer at Standard Chartered, told Bloomberg Television.
Short-Term Gain, But Long-Term Pain
|f Britain were to leave the EU, says The Economist, the gains would be in the short-term, but the risks over the long-term would be great.
“Yet these gains would be greatly outweighed by the costs of a British exit, which would dent trade with a market that accounts for half of Britain’s exports. The carmakers that use Britain as their European operations base would gradually drift away, along with large parts of the financial-services industry. Britain would have to renegotiate dozens of bilateral trade deals from a much weaker position than it enjoyed as a member of the EU. It would cut a greatly diminished figure on the world stage. It would have bought some sovereignty, but at an extraordinary cost to Britain—and its partners,” the paper notes.
Income Inequality Emerges As Key Concern In Davos
According to CNBC, income inequality eclipsed the failure of major financial systems as the key risk to global markets in a World Bank survey.
Branko Milanovic, lead economist at the World Bank’s research group, says that there are “two types of increasing inequalities: rising gaps between nations (which cause migration) and rising inequalities within nations (which cause protests, disenchantment and revolts),” both of which could result in political destablization.
The need to “spread the pain” is a view by Standard & Poor Moritz Kraemer, who asserts that safeguards to the “social contract may be necessary to assist in the cohesion of those member states suffering from high unemployment, excessive private leverage, and stagnating or falling living standards.”