Europe faced a huge influx of refugees this year from Syria and other Middle Eastern and African nations and next year will see the same amount, 700,000 migrants, reach Europe.
This is why Prime Minister David Cameron needs to hold the referendum on whether Britain should stay or leave the European Union if he wants to prevent a Brexit, says HSBC.
So far, Cameron’s Conservative government has not given an exact date for the referendum but it was promised to be before the end of 2017.
Liz Martins, an economist at HSBC, released a huge note this morning looking at the likelihood of Britain leaving the EU and apparently the immigration crisis is at the centre of decisions:
“It is hard to gauge the long-term impact of the Summer 2015 migration crisis on sentiment in the UK,” said Martins in her note. “While surveys suggest the images of the crisis did result in an immediate upswing in support for inward migration for those seeking asylum from Syria, it has also coincided with the increased support for Brexit in the polls.”
Here’s the chart:
In other words, people openly felt sorry for refugees trying to make their way to Europe but behind closed doors they still don’t necessarily want an increase in asylum seekers coming to Britain. In fact, it boosted support to leave the EU.
HSBC pointed out that a Survation poll commissioned by the Mail on Sunday, published on 6 September, revealed that support for a Brexit is in the lead with 51% in the lead. More tellingly, “of those who wanted to stay, 22% said they might change their minds if the migrant and refugee crisis deepened.”
With this in mind, Martins for HSBC highlighted how Cameron could possibly mitigate the chances of Britain leaving the EU
“The FT has also reported that the government is concerned about another potential migration crisis next summer,” said Martins at HSBC. “Applications for asylum have tended to spike in the summer months in recent years, due to the weather conditions for crossing the Mediterranean. From this perspective, the government may believe that having the referendum in April or June rather than September could make a tangible difference to the outcome.”
Don’t forget, this is on top of migrants with a non-refugee status, moving in from Europe or overseas.
To drive home the point even more about Cameron having to hold the referendum sooner rather than later, HSBC says that the only other way to keep people on side of staying within the EU is by negotiating a “new deal.”
However, again, with the refugee crisis creating a huge political hot potato and with Germany welcoming in 800,000 refugees this year alone, it is unlikely for Cameron to negotiate anything related to the Freedom of Movement rules in the EU or quotas for asylum seekers.
“Migration is a key issue for many supporters of Brexit, and here, Mr Cameron’s room for manoeuvre is limited,” said Martins in her HSBC note. “In November 2014, German Chancellor Angela Merkel told Mr Cameron that he was approaching a ‘point of no return’ with his demands for quotas on migration, and indicated that she would prefer to see Britain leave the EU than compromise the fundamental principle of freedom of movement.”
“So any changes on this issue are likely to be on the benefits migrants are entitled to on arrival, not to the number of arrivals per se. We remain of the view that the UK doesn’t have to leave the EU for the referendum to have a damaging impact on investor confidence in the run-up.
“This is at the heart of Prime Minister David Cameron’s dilemma: he has promised to hold the referendum by the end of the first half of this parliament — i.e. by end-2017. The sooner it is held, the shorter the period of potentially damaging uncertainty before the result of the vote is known.”