The UK has had an often fractious relationship with the rest of the European Union since it joined in 1973, with Euroscepticism sometimes one of the best tactics for aspiring politicians to get to the top.
Now, with almost every day marking a new milestone in the euro zone debt crisis, how can the UK avoid being dragged in?
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Despite being only around 30 miles from the rest of the continent at its closest point, the UK has often tried to differentiate itself from many other European countries: by securing an opt-out from the 48-hour limit on the work week; opting out of implementing human rights legislation, and, of course, by not joining the euro.
As the debt crisis has escalated, many of those who were skeptical about the single currency are using the opportunity to sniff: "I told you so."
William Hague, now foreign secretary, who was leader of the Conservative Party when the euro was in the process of being adopted, told right-wing British magazine The Spectator last week: “It was folly to create this system, it will be written about for centuries as a kind of historical monument to collective folly. But it’s there and we have to deal with it.”
“I described the euro as a burning building with no exits and so it has proved for some of the countries in it. But there are no exits,” he added.
The current coalition government marries the traditionally Eurosceptic Conservative Party with the Liberal Democrats, often viewed as the most pro-European of the three main political parties in the UK.
Despite marked euroscepticism in their early careers, both Prime Minister David Cameron and Chancellor of the Exchequer George Osborne have reiterated their support for the euro region. Osborne went so far as to support greater fiscal union of the 17 countries that make up the euro zone, a departure from his party's previous policy.
"It's very interesting that they have not given in to calls from certain parts of their party to demand repatriation of powers from the euro zone," Phillip Souta, director of Business for New Europe, a pro-European group of British business leaders, told CNBC.com. He called Osborne's support for greater union a "seismic shift" in British policy and said that Cameron had become "more euro-pragmatic."
"If there's a crash in the euro [EUR=X 1.3259 
-0.0079 (-0.59%) 
] or it fails, then it will lead to contagion," he added. "If you destroy demand for our goods, then people will lose their jobs. There's a huge threat to the banking system."
-0.0079 (-0.59%) ] or it fails, then it will lead to contagion," he added. "If you destroy demand for our goods, then people will lose their jobs. There's a huge threat to the banking system." While the links between the UK and Greece, for example, are relatively small, UK banks helped swell the Irish property bubble, and had around $222 billion exposed to Irish financial institutions as of March 2010.
The euro zone is still UK manufacturing's biggest trading partner.
London and the Bank Transactions Tax
One of the focal points for Euroscepticism at the moment is the mooted Financial Transactions Tax (FTT), a tax that could be imposed on any financial transactions carried out in Europe. European Commission President Jose Manuel Barroso has said that it could raise a much-needed 55 billion euros for the region's coffers, but reaction in the UK, where financial services employ more than a million people, has been overwhelmingly negative.
"My great fear is that there would be underlying increases in costs for everybody," Chris Cummings, chief executive of financial services trade body TheCityUK, told CNBC.com. "If companies move from the UK to the Asian markets, the loser would be the European economy."
He believes that any decision on the FTT should be made at the G20 level rather than European level.
Close to 80 percent of the revenue from the FTT would be collected in London, according to TheCityUK.
"Clearly the FTT is something that could potentially damage any financial center," Tracey Pierce, director of Equity Primary Markets at the London Stock Exchange, told CNBC.com. "Maintaining London as a global financial center and keeping it attractive is very important to the UK."
"One of the key attractions and differentiators of London is the number of brokers, analysts and investment banks, and they will just move if it's more expensive," Pierce added.
Cummings argued that many other industries would be hurt if the proposed tax was introduced, and that individuals would be hurt by, for example, reductions in the value of their pensions if dividends and share prices fell, or a higher cost of car insurance if reinsurers' costs rose because of the tax
(sourec)http://www.cnbc.com.
(sourec)http://www.cnbc.com.
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