Bill Jamieson: Beware lazy assumptions about EU

Global investment banks are among those business voices warning against a UK exit from the EU. Picture: Getty

Global investment banks are among those business voices warning against a UK exit from the EU. Picture: Getty

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LABOUR says British business leaders fear a referendum on Europe Union membership – but is this correct, asks Bill Jamieson

BE SCARED – very scared. Well before a referendum on our EU membership has been called, even before the Conservatives have secured an election victory in May to call one, the sirens have started and alarm bells are ringing.

“Business opinion” – a diverse, multi-headed agglomeration if ever there was one – is already reported to be warning, not just about the outcome of a referendum and the calamitous effect on jobs and investment of a UK exit from the EU, but that even a referendum itself on our membership would “damage confidence” and create “uncertainty”.

Project Fear, Mark Two? Scots can be excused a tingling sensation of déjà vu. And note also the provenance. Might this be the same “business opinion” that has chaffed and complained for years about job-destroying EU directives, “one-size-fits-all” regulation and the relentless push towards economic and monetary union?

Why, the very same.

Now, some of these concerns are genuine. Leaving the EU would be a momentous step for the UK. It would reverse a key dynamic of British government policy that has prevailed for more than half a century. It is not a step to be taken lightly, even if respected opinion polls continue to show a high level of disillusion and distrust among UK voters about our EU membership.

Concerns over jobs and investment merit a factual and informed response. But “business opinion” is not the single, uniform voice that is often assumed. And of late some of the proclaimed business opposition to an EU referendum has been contrived for political purposes.

Take the British Chambers of Commerce (BCC) conference this week, where Labour Shadow chancellor Ed Balls made much of the Conservative support for an EU referendum as being “anti-business”. BCC concerns over the referendum, ran the Labour rhetoric, showed that business has more to fear from a Tory EU referendum than from any anti-business rhetoric from Ed Miliband.

However, the facts regarding the BCC’s position suggest otherwise. John Longworth, head of the BCC – which represents members employing more than five million people – has called for a swift referendum on the UK’s EU membership, undermining Labour claims that such a vote would hurt investment. In an interview with the Financial Times this week he said companies would like a referendum and a vote on EU membership as early as the summer of 2016. This is a blow to Labour, which thought it could play the anti-referendum card to compensate for criticism that it is hostile to business and wealth creation.

The Confederation of British Industry (CBI) is altogether more critical of the EU vote and has long been sounding the klaxons on a UK exit. Its chief executive John Cridland has dismissed demands for an in-out vote on Europe as an “unnecessary distraction”.

An “unnecessary distraction”? The same objection could doubtless be applied to all elections and the whole tedious business of consulting voters.

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UK companies, he warned, may not survive without access to “our primary market”. The CBI has consistently attacked proposals to hold an EU vote as creating “uncertainty”, “political risk” and undermining “jobs and growth”. But is this the settled consensus of business opinion? Towards the end of last year more than 1,000 business leaders signed a Business for Britain letter firmly supporting a referendum, followed by an in-out poll and called for a fundamental change in the UK’s relationship with the EU. A YouGov poll also shows that business leaders support an EU referendum by 66 to 28 per cent, demonstrating that the CBI is out of touch with mainstream business opinion on this issue.

The CBI has long been a relentless EU apologist and its leadership campaigned back in the 1990s for Britain’s membership of the euro – a policy that would have been catastrophic for UK businesses. The organisation itself can certainly claim to be an EU membership beneficiary. Between 2009 and 2013 it received a total of more than €936,000 (£850,000) from the EU, an average of £160,162 per year, putting the EU among the organisation’s largest single donors.

What of the core issues on jobs and investment? Here a Global Britain and Democracy Movement research paper out this week provides some key statistics that challenge the assertion that jobs will be lost if we leave the EU – three million is the figure often quoted.

It was first cited 15 years ago and was shot down then, not least by the National Institute of Economic and Social Research, which dismissed some of the more extreme assertions as “pure Goebbels”. In truth, the EU has compelling reasons to continue to trade – and grow its trade – with the UK, as many member countries enjoy a favourable surplus on their trade with us. Indeed, many more jobs are dependent on what the other EU member states sell to us.

Beware also of hitching ourselves to a fading star. The EU’s share of global GDP has shrunk from 34 per cent in 1980 to just 23 per cent today. As emerging economies continue to blossom that share will continue to decline. Finally, what of the potential loss to the financial services sector? It contributes a fifth of the UK’s annual economic output and had a £19 billion trade surplus with the EU in 2013.

The big global investment banks are pushing for Britain to stay in the EU. Dutch giant ING has just published a scary assessment predicting catastrophe for the UK economy in the event of a Brexit. And co-chief executives of Goldman Sachs International have warned that European banks will relocate from London to the continent “in very short order” if Britain leaves the EU.

But few sectors have been more vocal in their criticism of EU directives and oversight than the financial services industry. And the banking behemoths with a big London presence have not exactly been forming an orderly queue to relocate their bulge-bracket top earners to Paris, there to share the joys of François Hollande’s benevolent tax regime.

Given voter concerns, the UK is right to seek a renegotiation of our membership terms. Business voices should certainly be heard on this, but not just from one side only.

And we surely deserve better than a re-run of long discredited scare stories.

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