The latest leaked drafts of the UK-EU renegotiation will make the deal on offer to the UK even worse than initially thought, new Vote Leave research shows.
The new deal reasserts the ‘powers of the institutions of the European Union’, waters down so-called protections for the City of London and makes it more difficult for the UK to trigger its ‘emergency brake’ on benefit claims.
Co-Chairman of Conservatives for Britain Steve Baker said:
'The Prime Minister is asking for very little in this renegotiation but now the EU is watering it down even further. Worse still, the proposed deal now contains hidden nasties that will be used to undermine British interests. A remain vote will be a green light for more money and power flowing to Brussels with Britain helpless to stop it. The only safe option is to Vote Leave.’
Notes to editors
The latest draft agreement ahead of the February European Council has been leaked. It can be read here.
The revised text reasserts the ‘powers of the institutions of the Union’, making clear the EU’s legislative and budgetary powers are unaffected.
- The new draft adds that member states are: ‘determined also to facilitate and support the proper functioning of the euro area and its long-term future, for the benefit of all Member States, [and will] ‘Respect ... the powers of the institutions of the Union, including throughout the legislative and budgetary processes’.
- This affirms the supremacy of EU law over the UK. Because Britain has very few votes in the EU’s Council of Ministers, the UK will continue to be outvoted on every occasion it opposes a measure. On all 72 occasions that the UK has voted against a measure, it has been defeated, costing the UK £2.4 billion each year (Vote Leave, October 2015, link). Each year, the UK pays £19.1 billion to the EU. This will not change (ONS, Pink Book, 2015, link). The UK also remains liable to pay additional ‘surcharges’, like the £1.7 billion bill imposed by the European Commission in 2014.
Section A: Economic Governance
The new draft makes clear that all countries in the EU other than the UK and Denmark must ultimately join the euro, demonstrating how the UK will be isolated in future.
- On the obligation of Member States to join the euro, new text is added to the preamble to the agreement affirming that economic and monetary union (EMU) is an objective of the EU, ‘in accordance with the Treaties’.
- The leaked draft adds that the UK’s ability to opt out from EMU ‘is without prejudice to the fact that Member States whose currency is not the euro, other than those without an obligation to adopt the euro or exempted from it, are committed under the Treaties to make progress towards fulfilling the conditions necessary for the adoption of the single currency.’
- The Eurozone countries already have a permanent structural majority in the EU Council. This will only increase as countries are obliged to join the single currency, making the UK more isolated and unable to .
The new draft waters down the UK’s opt-out from the Banking Union, making clear this is subject to EU-wide requirements of ‘group and consolidated supervision’.
- It makes clear that the UK’s exemption from ‘Union law on banking union’ is ‘subject to the requirements of group and consolidated supervision.’
- On substantive EU banking law, it waters down the UK’s exemption. The text changes from ‘different sets of Union rules may have to be adopted in secondary law’ to ‘different provisions within the single rulebook and other relevant instruments may be necessary’.
- It adds that the ability of UK regulators (rather than the EU) to supervise financial institutions is ‘subject to the requirements of group and consolidated supervision’. It expands the proviso to this principle, to allow ‘all relevant Union bodies’ as well as ‘Union institutions’ to ‘take action that is necessary to respond to threats to financial stability.’
- This means that the European Central Bank and European Banking Authority’s powers to supervise subsidiaries of foreign banks based in London will be not be affected (Bank of England, ‘Consolidated supervision of banks’, 1998, link). In other words, the agreement will not return powers over the City.
Section C: Sovereignty
The new draft erodes the UK’s sovereignty further.
- It states that the objective of political integration ‘enjoys wide support in the Union’, preempting the result of the UK’s referendum.
- It erodes the UK’s responsibility for national security, adding that ‘the benefits of collective action on issues that affect the security of all Member States are recognised.’
Section D: Social benefits and free movement
The new draft criticises the UK for not imposing transitional controls on migration in 2004, makes it harder to trigger the emergency brake, and demonstrates the narrowness of the agreement on child benefit.
- The new text adds a criticism of the UK for not imposing transitional controls on immigration from new accessions to the EU in 2004, adding that the negative effects of migration can occur ‘in particular where the latter has not made use of the transitional periods on free movement of workers which were provided for in the Accession Acts.’
- It makes it more difficult for the UK to trigger the emergency brake, adding that the Commission must now examine not merely the UK’s notification of a decision to use the brake, but also ‘the reasons stated therein’.
- It makes clear that the principle on the indexation of child benefit to the standard of living in the member state in which it is paid cannot be extended to other benefits, adding: ‘The future system of optional indexation of child benefits will not be extended to other types of exportable benefits’.