SPECIAL REPORT: Floating voters may hold key to Britain's EU future

By Sarah Young, Costas Pitas and Elizabeth Piper HASTINGS, England (Reuters) - Graeme Williams is sure of only one thing as Britain heads for a momentous referendum on whether to stay in the European Union: He hasn't a clue which way to vote. "I'm sitting completely on the fence," said Williams, a 62-year-old freelance commercial photographer. "Decision-wise, I am definitely completely undecided about which is the right way to go." To make up his mind, Williams said that he needs "the right information" – but that neither side in the debate is providing it. Many people in his home town of Hastings, a historic spot on the UK's south coast where invaders from France arrived in 1066, feel the same way, he said. He may well be right. According to recent opinion polls, up to a fifth of British voters remain undecided on how to cast their ballot in the referendum on June 23. On that day they will face the question: "Should the United Kingdom remain a member of the European Union or leave the European Union?" It's a binary choice, but not a simple one. Instead it's shot through with feelings about nationhood, identity and culture, as well as economics. How voters answer the referendum question will help shape the future of the UK and the EU. A British exit – Brexit – could rock financial markets, sink EU hopes of closer integration and roil relations between the United States and Britain. Yet a vote to remain is no guarantee of calm: It could trigger a new phase for Europe, with some countries pressing for more integration and others seeking the flexibility sought by Britain. Polls show the referendum battle is volatile but close, with most finding voters fairly evenly split. One YouGov poll this month had 44 percent in favour of remaining and 40 percent in favour of leaving, while an ICM poll had 43 percent for remaining and 47 percent for leaving. The Undecideds will likely determine the outcome. Andrew Hawkins, chairman and founder of polling firm ComRes, said the referendum was unusually unpredictable. "I think there are two angles to this," he said. "One is the straight proportion of people who say they don't know (how to vote), and the other is the proportion of people who say they may change their mind. And when you add both of those together you realise that the race is still definitely wide open." WHAT MATTERS TO THE UNDECIDEDS? A town of 90,000 overlooking the English Channel, Hastings illustrates Britain's confusion over Europe in several ways. It encapsulates national sovereignty: This is the place that gave its name to the battle where William the Conqueror of Normandy defeated England's King Harold 950 years ago. Yet it's closer to France than London, and has benefited from EU funds. Since the late 1970s, Hastings has been a political bellwether. At general elections, whichever party won in Hastings went on to form the national government, and now the town broadly reflects the EU debate. A study by the polling company YouGov rated opinions on the EU in East Sussex, the county where Hastings lies, as "mixed, leaning eurosceptic." Some of its residents are taking a keen interest in the referendum: One recent debate passionately discussed everything from whether vacuum cleaners had been made less powerful because of EU rules to whether Britain would regain more control over fishing – a key local industry - if it voted for Brexit. Among those making up their minds is small business owner Howard Martin, 53, who said he had voted for all Britain's main political parties over the years. In Martin's view, much of the debate over Brexit has focused, wrongly, on the vexed issue of migration. Proponents of leaving the EU see Brexit as a way of limiting the high levels of immigration that Britain has faced over the past 15 years. For Martin, migrant numbers are more a matter of policing borders properly. Instead, he's more worried about the economic impact of Brexit, but unclear of what it might be. "They (the Leave campaign) don't have a picture of what it'll be like when we leave, if we leave," he said when first interviewed in April. Equally, he found claims by the Conservative government that leaving the EU would wreak economic damage to be too simplistic. And like many others Reuters spoke to, he was unconvinced by an official leaflet, despatched to all households, making the case for Britain to stay in the EU. "It just seemed like a marketing leaflet, which swayed me heavily against it," said Vicki Duffey, owner of a coffee shop and a Labour voter. "It felt very manipulative." Suspicion of politicians runs deep, including of Boris Johnson, a popular Conservative who initially sat on the fence before belatedly backing Brexit. Lucy McCarthy, a 40-year-old project manager for a charity, said: "Take Boris, he's not to be trusted. And George (Osborne, the UK Chancellor and supporter of Britain staying in the EU), he just wants to be Prime Minister eventually. It's farcical. So I don't think you can really trust them. I don't think that they have our best interests at heart whatever they're arguing." Even the intervention of U.S. President Barack Obama, who last month urged Britain to stay in the EU, seemed to have little effect. While Martin, the small businessman, said Obama's words inclined him towards the "Remain" camp, McCarthy was sceptical. "I think (Obama's stance) was to be expected because it's in all the powerful nations' best interests that we stay in Europe." In the days after Obama spoke in favour of Britain remaining in the EU, opinion polls showed support for Brexit held relatively steady. According to an ICM poll on April 26, Brexiteers led with 46 percent support against 44 percent of voters wanting to stay in the EU. Some later polls, however, showed the "Remain" camp ahead, and Betfair, a betting company, put the odds of Britain remaining in the EU at higher than 70 percent. Behind the confusion and uncertainty lie deeply conflicting feelings about the EU, judging by a study published in February by NatCen Social Research, a long-established independent agency. The findings differ from opinion polls because the study is not a snapshot but draws on the large-scale 2015 British Social Attitudes survey, which was conducted over months. An analysis written by John Curtice, a professor of politics and Senior Research Fellow at NatCen Social Research, found that the majority of Britons (65 percent) are sceptical of the EU and want it to have less power; yet only 30 percent want to leave. What explains this dichotomy? Curtice highlighted two factors: cultural and economic concerns. Many Britons dislike the EU on cultural grounds, according to the study. Nearly half (47 percent) thought being a member of the EU undermined Britain's identity and nearly two-thirds (65 percent) said they would like Britain's relationship with the EU to be "looser." At the same time, however, 40 percent of Britons also believed that leaving the EU would harm the country's economy and only 24 percent thought leaving would make Britain better off economically. Curtice concluded that economic fears over leaving trump the widespread cultural antipathy to the EU. While voters concerned about the cultural consequences of EU membership are very likely to be sceptical about the EU, he says, such voters are only likely to want to leave if they are convinced that leaving would make Britain economically better off. In Hastings, where a newly reconstructed pleasure pier gives fine views of the town's brightly-coloured fishing fleet, shingle beach and towering cliffs, coffee-shop owner Duffey said that the economic factor might be the decider. In an interview in late April, she said: "My gut feeling is to stay in, and that's basically because I don't know what the alternative is and that scares me." THE NEGATIVE SIDE The referendum campaigns kicked off after Prime Minister David Cameron struck a deal on Feb. 19 with other EU nations that he said gave Britain "special status" in the union. Britain would be permanently exempt from the EU's central aim of "ever closer union," he said, and "never part of a European superstate." Armed with that and other concessions, Cameron, whose party has long had a strong eurosceptic streak, set about arguing for Britain to stay in the EU. His team in Downing Street coordinates with the leading "Remain" group, Britain Stronger In Europe. While the campaign has extolled positive aspects of EU membership, it has also focused on what it says would be the hefty economic cost of leaving. At the same time, the "Leave" campaign has found it easier to point to the drawbacks of EU membership than define the advantages of quitting. The critical tone has not gone down well in Hastings. Williams, the deeply undecided voter who is also chairman of the local Hastings Conservative association, said simply: "It's always the negative side of things." Martin, the small business owner, said: "The 'stay' campaign don't seem to be selling me the idea of why we should stay." Equally, when Michael Gove, a leading Conservative and supporter of Brexit, said that Britain could leave the EU and still be part of a large free trade zone, Martin was unconvinced, describing the Brexit campaign as "fantasists." Such disillusion makes sentiment volatile and may affect the number of voters who turn out on June 23 - which could be crucial to the outcome. The sceptics tend to be older people, who are more likely to vote. Europhiles include many young people wary of Cameron and the Conservative government, and less likely to vote. According to an Opinium poll for The Observer newspaper in March, just 12 percent of those aged 25 to 34 thought EU membership an important issue, compared with 53 percent of those aged over 65. Such factors make the role of the opposition Labour party important because many young voters may follow its lead. Jeremy Corbyn, the Labour leader, has declared his support for Britain remaining in Europe, but is seen by critics as half-hearted. Corbyn has long harboured doubts about the EU and voted against EU membership when Britain last had a referendum on the subject in 1975. "Corbyn is critical in this – he appeals to a large group of people," said a source on the "Remain" campaign. So the Britain Stronger In Europe group is working closely with "Labour In for Britain," the Labour party campaign in support of membership. However, there is little sign of Cameron and Corbyn working closely together - even though they are both aiming at the same goal. They do not engage in direct contact over the referendum, according to sources in the "Remain" campaign. A Downing Street spokesman declined to comment. For Beth O'Brien, a 24-year-old who works at a BMX bike park in Hastings, the lack of dynamism leaves her unsure how to vote. "It feels like they (politicians) don't believe what they're selling," she said. "So why should I buy it?" BIG SWING The closeness of the polls suggests the race will go to the wire. Anand Menon, professor of European politics and foreign affairs at King's College, London, believes many voters will change their minds as the referendum nears. He argues that, unlike general elections, the usual stabilising factors of loyalty to a particular party or social group are absent. Anand, who is also director of UK In A Changing Europe, an initiative promoting independent research on UK-EU relations, pointed out that the last time Britain voted on its relationship with the EU, public opinion went through a large and unexpected swing. When the campaigns started, he said, two-thirds were against Britain staying in the EU; but by the time of the vote that had swung to the opposite and two-thirds voted to stay in. Among the undecided voters of Hastings, there were hints that in the end a fear of leaving the EU for the unknown will sway people. When first interviewed in mid April, Duffey, the coffee shop owner, said she would probably make up her mind only when "standing in the polling booth." And O'Brien, the 24-year-old, said: "I'll probably just close my eyes and put an X in the box." Later both said they were leaning towards voting to stay in the EU. "I am probably going to vote to stay in to be fair," said O'Brien. "I don't see many pros to changing; I just see a lot of cons that could happen. There are potential pros, but there's no guarantee for those pros. "So why take the risk?" (Sarah Young and Costas Pitas reported from Hastings, and Elizabeth Piper from London. Editing By Richard Woods and Guy Faulconbridge)