As snow and ice lie thick, another chill is around the corner, according to Sir Andrew Cahn, ex Chief Executive of UK Trade and Investment (UKTI) – an investment chill. And he isn’t alone in his concerns.
“The Europe debate does not help to create certainty” says David Sproul, UK head of Deloitte,” There is no question it will impact business – it will hit investment into the UK.”
Most business leaders already agree the single market is good for business. With a market of 500m consumers across 27 countries the EU is the world’s biggest trading block and SMEs of all kinds have access to that market.
Europe remains British SMEs’ largest overseas trade partner, with 68 per cent of those asked in a recent survey indicating they bought goods from suppliers on the continent, and on the export side, 76 per cent indicated their overseas customers were in Europe.
No tariffs, duty or quotas – if we weren’t in the EU, our goods and services would be liable to import duty and tariffs that would increase our prices. There could even be barriers to export such as onerous inspection regimes or quotas. An LFIG member told me this week the open market of the European Union is essential to sell online across the EU.
So, if the UK left the EU, he would have to leave the UK and take his business and taxes to another EU country instead. Apart from having to charge higher prices, having to send everything through customs would mean more paperwork, slower delivery and worse service to his customers.
Accessing a market this size is a must for foreign investment and we all know that the English language gives us a huge advantage in the UK with none of the other EU languages as well known as a second language. That investment does not just benefit one company but a myriad of SMEs who depend on contracts with these businesses. Inward investors such as Nissan, Honda, Airbus, IBM could all be at risk.
Even those SMEs who do not provide goods or services directly to such companies benefit from a better local economy. Those of us who remember the large scale closures of steelworks, mines and manufacturing plants in the ‘eighties will remember that as the jobs were destroyed and the money sucked out of the local community, the retailers and leisure providers struggled too.
To see what that could mean look at the Centre for Cities study which reviews how cities are coping with the recession. Nissan’s investment in Sunderland will have a huge impact on the city’s recovery,’ said The Centre for Cities chief executive Alexandra Jones. She added that Swindon has recovered quicker than most because of Honda’s investment but is now at risk because Honda are cutting jobs.
Investors like these make a difference to our national GDP and to our SMEs. Leaving the EU would risk us losing the current investors and the five year debate risks us losing the opportunity of attracting more like them. Not a great option as we hover on the edge of an austerity driven triple dip recession.
As SMEs look increasingly at BRIC markets further afield, let’s remember too that the European Union negotiates for easier access, for less red tape and for speed of working. Collectively, we have more negotiating power than the UK has alone, as Cameron acknowledged in his recent speech.
Business leaders for the most part do not want to leave the single market, they talk instead about renegotiating on bureaucracy and red tape. But what do they really mean? Cameron’s attack on the working time directive and doctors gives us a clue.
“It is neither right nor necessary to claim that the integrity of the single market, or full membership of the European Union requires the working hours of British hospital doctors to be set in Brussels”
But who amongst us would like crucial decisions on our health to be decided by an exhausted doctor?
The single market good, the social contract, not so much. Yet that social contract has given us rights and opportunities as citizens in the UK, such as maternity and paternal rights, parental leave, equal pay, minimum time off, all rights that if asked the average person in the UK would support.
Acting collectively as the largest trading market, in the Social Chapter and elsewhere we have set out our stall, our idea of the society we want to create. It is a Europe of aspiration and innovation, not one that drives to the bottom. It is a Europe that values equality and fairness.
So we have the European Union. A single market that most agree benefits our economy. A social Europe that protects people working and living in it. Two sides of the same coin. This is the Europe Labour MEPs have fought for, this is the Europe I believe in, one that builds a prosperous economy that is fair for all and to all.
This is the real argument we have to fight and win over the next five years.
Karen Landles is a behavioural change consultant and member of the LFIG executive