Last week prime minister David Cameron made his long-awaited announcement that, if he and his Conservative party are re-elected in 2015, he will hold an in-or-out referendum on Britain's membership of the EU before the end of 2017. Although Cameron's intentions came as no shock, they nonetheless ruffled the feathers of his coalition partners, Labour opposition and fellow European leaders.
David Cameron has faced mounting pressure from eurosceptic Tories to put an end to Britain's relationship with the EU in the wake of the European debt crisis and the growing sovereignty of Brussels. While he has, until now, refused to contemplate the UK leaving the EU altogether, the prime minister has long argued for a renegotiation of the terms of Britain's membership of the EU.
His latest speech was sketchy on the details of what powers he wants to claw back from Brussels, but he has indicated that he thinks the UK should remain a partial member of the EU, allowing us to take advantage of the free trade agreement in the single market, without being tied into the common political and legislative policies which currently apply to all member states.
The UK Independence Party (UKip), founded in 1993 with the aim of withdrawing the UK from the EU, supports Cameron's referendum and cites the current cost of EU membership - £60 billion a year - and Brussels' strict regulations on financial services as reasons for abandoning the Union.
But both deputy prime minister Nick Clegg and leader of the opposition Ed Miliband have ruled out support for Cameron's promised in-or-out referendum, with Clegg accusing Cameron of creating "years of grinding uncertainty" that will hamper economic recovery. Meanwhile, Cameron's demands have been criticised by the rest of the main European powers. German foreign minister Guido Westerwelle summed up the sentiments from the continent: "Cherry-picking what you want from Brussels is not an option," he said.
The main argument against Britain exiting the EU is the ramifications it would have for the country's trade sector. The EU is the largest market for British exports, accounting for more than half of all overseas sales. Membership of the EU also allows businesses to take advantage of the free trade agreement between member states, which exempts them from paying export taxes on goods. In response to Cameron's intentions, two of the largest car manufacturers based in the UK, Ford and BMW, have warned that an EU exit would be catastrophic for the UK economy.
A change in the UK's relationship with the EU could also have negative implications for London's financial sector, which is the favoured location for many foreign banks due to its position as a gateway to the European market. With financial services contributing as much as 10 per cent to UK GDP, the flight of foreign firms from the City could put further downward pressure on the economy.
Cameron's aim over the coming years will be to attempt to renegotiate Britain's membership of the EU and find a middle ground that allows the country to benefit economically and politically from the Union, without surrendering sovereignty. But there are no guarantees that Cameron will be in a position to hold a referendum in 2015, or that the lines between europhiles and eurosceptics will be the same in five years' time as they are today.
How would you vote in Cameron's in-or-out referendum on Britain's membership of the EU?
*"Right now I'd stay in the EU because I'm optimistic we can renegotiate our membership to preserve our trade benefits, while making it more democratic and less interfering. If reform fails, then we'd probably be better off leaving." *James Mottram - University of Cambridge
*"I'm not sure. The referendum will be a notable moment in British politics. While most decisions made by the government are criticised by the general public, the electorate as a whole will decide." *Madhav Parmar - University of Warwick
*"I'd vote to stay in the EU. I believe the free market holds too many advantages for us to leave, and our membership allows us to influence decisions that have global implications, rather than being left out in the cold during negotiations." *Thom Louis - University of Edinburgh