Clegg's EU referendum move raises the pressure on Miliband

The Deputy PM has said it is now a question of "when, not if" a referendum will be held. Does Miliband agree?

Nick Clegg's declaration at PMQs that it is now a question of "when, not if" an EU referendum will be held was a significant advancement on his previous position. The Deputy Prime Minister has long supported the coalition's "referendum lock", under which a vote is triggered whenever there is a transfer of powers to Brussels, but this is the first time that he has suggested that one will be held at some point in the next three-four years.

It remains unclear whether Clegg believes this would be a yes/no referendum on a new treaty or an in/out vote on EU membership. The referendum lock, introduced through the government's European Union Bill, suggests the former but the Lib Dems' 2010 manifesto, which said that an in/out referendum should be held "the next time a British government signs up for fundamental change in the relationship between the UK and the EU", suggests the latter. At PMQs, Clegg misleadingly conflated the two, stating: "That's what we had in our last manifesto and that's what we have now acted on in government by passing legislation together in the coalition just two years ago."

But this ambiguity is less important than the fact that he now believes some kind of referendum is inevitable. One question that follows is how Labour will respond. In an interview in January, Ed Miliband explicitly stated that he would not repeal the coalition's referendum lock ("there is legislation on the books that we don't intend repealing," he said) but has yet to say whether or not he believes a vote will or should be held in the next four years. Clegg's move means it will now be harder for him to avoid answering this question. 

Ed Miliband speaks at the CBI's annual conference on November 19, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Brexit has forced the Tories to retreat from austerity

George Osborne's decision to abandon his budget surplus rule is an acknowledgment of economic reality.

Before Brexit, it was intensified austerity that was threatened by George Osborne. But after the event, the Chancellor has taken the reverse course. In his speech to the Manchester Chamber of Commerce, Osborne abandoned the ambition that has defined his Treasury tenure: a budget surplus.

He said: "The referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth.

"We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade. That's exactly what our fiscal rules are designed for."

Rather than a dramatic reversal, Osborne's decision is now merely an acknowledgment of economic reality. The rule is automatically suspended when growth falls below 1 per cent (as it almost certainy will) in order to avoid further depressing output. But even before Brexit, Osborne was regarded by the IFS as having only a 50 per cent chance of achieving his target.

Labour is highlighting its consistent opposition to the rule, which it again called for the abandonment of after Brexit. A senior source hailed a "huge victory" for the "centrepiece of our economic criticism of the government over the last nine months since Jeremy [Corbyn] took over the leadership." I'm told that Labour will not abandon its Fiscal Credibility Rule as it is "more robust and flexible". Unlike the government's surplus target, it allows borrowing for investment, mandating only that day-to-day spending be balanced (a condition suspended if the Bank of England believes monetary stimulus has become ineffective).

As well as reflecting the new economic reality, Osborne's announcement was also an acknowledgment of the new political one. It will most likely be a future Chancellor who determines the path of fiscal policy (starting with this year's Autumn Statement). At her leadership launch yesterday, Theresa May pre-empted Osborne by declaring that "we should no longer seek to reach a budget surplus by the end of the parliament". Among the Home Secretary's notable supporters is Cabinet Office minister and arch-Osborneite Matt Hancock. The Chancellor's decision to echo May's stance is being seen by some as the prelude to an endorsement. But Michael Gove, who reportedly wants Osborne to remain in post, also acknowledged the new fiscal reality at his launch this morning.

Far from more austerity, it is already clear that Brexit will mean considerably less. As Osborne knows, there is no alternative.

George Eaton is political editor of the New Statesman.