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January 17, 2013 10:20 pm
The countries of the EU are the destination for almost half of British exports, but trade with buzzing emerging economies, such as China and Brazil, is on the rise. So, too, is disagreement among business leaders about how renegotiation of Britain’s membership of the bloc could affect trade and investment.
Associations representing investors from the US, Germany, France, Ireland, Canada and Sweden voiced concern that the UK government is dragging out the debate on membership, making it difficult for businesses to plan and harming the UK economy.
“We fear that a tenuous bond between Britain and the rest of the EU will lead to fewer foreign companies, especially the small and medium-sized ones, operating in the UK, as it will lead to a higher administrative burden for them,” said Klaus Peter Fouquet, chairman of the German-British Chamber of Industry and Commerce.
Jeffries Briginshaw, managing director of BritishAmerican Business, said: “A lot of American investors come to Britain for one of the obvious attractions – that the British market is a gateway to the EU and to Europe, the Middle East and Africa.”
Mr Briginshaw warned that the UK could lose out on the benefits of the proposed EU-US trade deal if it were to leave the union. “It is important to have a voice at the table, it really is.”
But a group of City figures including Robert Hiscox, chairman of Hiscox, an insurer, Jon Moulton, head of private equity firm Better Capital, and Adam Fleming, chairman of Fleming Family and Partners, a wealth management company, called for an “in-out” referendum on EU membership.
The prime minister had been expected to propose renegotiation at a speech in Amsterdam that was cancelled because of a hostage crisis in Algeria.
One member of Mr Cameron’s business advisory group said the EU needed reform because “the European dream has turned into a nightmare. The concept of the euro is bust. Monetary union does not work without fiscal union and it doesn’t allow countries to adjust competitively.”
But the executive warned that Mr Cameron was being “brave, to put it mildly” to pursue his strategy “without knowing what the outcome of all this will be for our role in the single market. We could end up with a second-class status in which we don’t get the advantages of the single market that we enjoy now.”
Big business remains largely pro-European and nervous about Mr Cameron’s policy, but he has backing among smaller and medium-sized businesses. A poll by the British Chambers of Commerce found almost half backed renegotiation, while 26 per cent wanted to retain the status quo and 12 per cent want to leave the EU.
“Unlike the usual FTSE 100 suspects, our members think in the UK economic interest, liking the EU single market but disliking ever-closer union,” said Adam Marshall, the BCC’s policy director.
Eurosceptics say while the EU accounted for almost 40 per cent of global economic output four decades ago, today it accounts for 25 per cent.
“To compete, the UK needs to change its relationship with the EU as part of a wider, global realignment of trade relations,” Douglas Carswell, a Conservative MP, wrote this week.
The debate comes amid concern that Britain’s once stellar performance in inward investment may be faltering. The UN said in July that while the UK had the world’s second-largest accumulated stock of foreign direct investment by value, it had slipped from second to seventh for inflows.
The UK head of Honda, the Japanese carmaker, warned that Britain risked losing investment if it moved to a marginal place in the EU. But sceptics say that warnings in the past that investment would be lost if Britain did not join the euro proved false.
Steve Aiken, the head of the British-Irish Chamber of Commerce, said the way the UK government had handled the Europe issue was an “omnishambles”.
“Is this going to be two years, three years, four years, maybe five years – one reference was to a referendum towards the end of the next parliament,” he said. “Are we really saying it will be seven years downstream before we have a degree of certainty where the UK sits within the wider environment?”
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