Strong indications business will support EU in Brexit vote

While politicians are sharply divided over whether or not to remain in the EU, the British business community has so far indicated a strong argument to hold on to membership, encouraged by the agreement in Brussels following a programme of reforms presented by prime minister David Cameron

The historical referendum takes place in four months’ time on 23 June and comes 41 years after the last referendum on UK membership of the previous European Economic Community (EEC) in 1975, at which time there was an overwhelming victory with a 67.2% vote to maintain membership as businesses campaigned on the advantages of a trading bloc, the Common Market. The EU has since grown from 9 to 28 members.

The current issues at the centre of the current referendum however concern safety and security of borders and similar concerns that come with the free movement of people.

Leading the business charge this time to maintain membership is the CBI, the UK’s FTSE 100 heavyweights, who are strongly backing Cameron, indicating confidence in his agreement in Brussels on the renegotiated terms of the UK’s future relationship with the EU.

In a joint letter the CBI and its counterparts in Germany, France, Italy and 16 other EU member states backed Cameron’s proposals to make the EU more competitive and outward-looking to deliver jobs and security across Europe.

‘Business is an essential part of the solution to many of the challenges facing the EU but companies need a strong and globally competitive European economy. We therefore want to see a more competitive EU – a key pillar of the UK’s negotiations on its EU membership – which will be beneficial for citizens across the continent.

‘The 21 federations - speaking on behalf of over 2.5 million businesses, employing more than 50 million people - believe that, while the referendum is a matter for the British people, they support the UK’s continued membership of a reformed EU,’ the CBI said.

Carolyn Fairbairn, CBI Director-General, added that being part of the single market ‘guarantees businesses tariff-free access to 500 million consumers in Europe and is a cornerstone of the UK’s economic success.’

‘These reforms protect the UK’s place and influence inside this important market and a renewed focus on EU competitiveness will help British firms succeed in creating jobs and economic growth at home in the years ahead. Firms will particularly welcome a commitment to reduce unnecessary regulation.

‘Most CBI members – though not all – have told us that being in a reformed EU is better for jobs, growth and prosperity. With a final deal now in place, we will consult our members to ask for their views once again,’ said Fairbairn.

The Institute of Directors (IoD) however has not given specified an outright ‘in’ or ‘out’ stance but its latest poll shows that six out of 10 business leaders will vote to remain in the EU. In a previous survey however, 80% of its members indicated some form of relationship with the EU – ranging from a trade, to a subsidiary on the continent, to employing an EU citizen.

Around two thirds of its members backed Cameron’s plans to reduce red tape, confirming that Britain would not be pulled into an ‘ever closer union’ with increased protections for the UK’s financial services sector.

IoD director general, Simon Walker, called on all businesses to think carefully about how the EU referendum would affect them.

‘Our members have concerns about the way the EU operates in some areas. But this is balanced against the ability to trade easily across the single market. Their operations are deeply entwined with the European Union – more than three-quarters have commercial links with other member states.

‘It is worrying that 4 in 10 firms have not discussed the referendum in the boardroom. Now that a date has been set, all firms should consider what the potential outcomes would mean for them.

‘Amidst all the rhetoric and campaigning, it is vital that people appreciate the consequences for jobs, prices and economic growth. They need to hear what companies think. Business leaders will take different positions, but they should not be afraid to stand up. This referendum is a momentous political choice. Let us make sure it is a well-informed one.

‘Businesses are foursquare behind the commitment to reduce the burden of regulation outlined in the agreement. However, most are sceptical about what Brussels can actually achieve. If Britain does choose to stay in the EU and if membership is to be the ‘best of both worlds’ as the prime minister has claimed, then reform cannot stop on June 23rd.’

The Federation of Small Businesses’ director of policy, Mike Cherry said the organisation’s role as the voice for smaller businesses will be critical.

‘Our research shows small business owners want both official campaigns to focus on the practical impact that remaining within or leaving the EU would have on their firms.

‘We will push both sides to address the questions our members want to see answered, before they cast their vote,’ said Cherry.

Time to go!

In a statement on his Facebook page, justice minister Michael Gove MP said that it ‘pains’ him to have to disagree with Cameron on the issue.

‘My instinct is to support him through good times and bad. But I cannot duck the choice which the prime minister has given every one of us. In a few months’ time we will all have the opportunity to decide whether Britain should stay in the European Union or leave. I believe our country would be freer, fairer and better off outside the EU,’ said Gove.

Gove argues that the decisions which govern British citizens should be decided by individuals voted for by the electorate.

If power is to be used wisely, if we are to avoid corruption and complacency in high office, then the public must have the right to change laws and Governments at election time.

‘But our membership of the European Union prevents us being able to change huge swathes of law and stops us being able to choose who makes critical decisions which affect all our lives. Laws which govern citizens in this country are decided by politicians from other nations who we never elected and can’t throw out.

‘We can take out our anger on elected representatives in Westminster but whoever is in Government in London cannot remove or reduce VAT, cannot support a steel plant through troubled times, cannot build the houses we need where they’re needed and cannot deport all the individuals who shouldn’t be in this country. I believe that needs to change. And I believe that both the lessons of our past and the shape of the future make the case for change compelling.

‘The ability to choose who governs us, and the freedom to change laws we do not like, were secured for us in the past by radicals and liberals who took power from unaccountable elites and placed it in the hands of the people,’ said Gove. 

Conservative MP Liam Fox has joined the ranks of Gove and London Mayor Boris Johnson in calling for Britain’s exit.

Fox has consistently argued for an exit in parliament due to the lack of control of endless reams of legislation being issued from Brussels.

‘It is sorry spectacle to see a British prime minister having to take the political begging bowl round other EU states to ask their permission to make minor changes to our own system of welfare payments.

‘We didn’t get control of our own law making and achieved no treaty change. The European Court still has the final say on our laws so we cannot escape from the concept of ever closer union.

‘We didn’t ask for any change to the free movement of people and so we will continue to have mass migration from the European Union as the British economy continues to grow, while Europe stagnates.

‘On top of all of this we are subsidising the whole process to the tune of £55m per day, £10bn per year, or the equivalent of one new hospital every week. That is money that would be better spent in Britain. We’ve seen the deal – it’s time to go,’ said Fox.

Sterling reaction

In the meantime, sterling has reacted, losing 2% of its value driven by London Mayor Boris Johnson’s announcement to back the ‘exit’ camp spurring even government bonds to lose some value.

Commenting on sterling’s bearish reaction to Johnson’s announcement, Simon Smith, chief economist at forex traders FxPro, said: ‘Between now and 23 June, we will have 191 days during which the issue is never far from the headlines. For sterling, this won't be a fun time and it's more the uncertainty that will weigh on the currency, rather than investors taking a view on the outcome and the implications for the economy, which are hard to argue either way.’




Penny Sukhraj |Content editor, Accountancy - (up to 2016)

Penny Sukhraj, former content editor and writer for Accountancy and Accountancy Live, responsible for commissioning and editing news...

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