European Movement UK

Britain's future is with Europe! Join the debate and put your opinion forward!

by Charles Kennedy MP, President of the European Movement UK ///

The CBI published on Monday a wide-ranging report, ‘Our Global Future: the Business Vision for a Reformed EU’. The CBI argues that the UK must remain part of the EU, rules out alternatives to full membership and points out that the EU benefits each UK household by up to £3,000 a year. Their research shows that membership of the EU is in fact worth approximately 4-5% of UK Gross Domestic Product every year, or £62-78 billion.

The findings of this report are consistent with a CBI/YouGov survey of more than 400 businesses employing more than 1.5 million direct employees, which shows that 78% of firms favour staying in the EU, including 77% of small and medium-sized enterprises (SMEs). 86% believe that leaving the EU would have a negative impact on UK firms’ access to EU markets and 59% thought that an EU exit would reduce the international competitiveness of the UK as a whole.

The CBI’s report echoes what other leading business representatives have said.

85% of EEF, the manufacturing organisation, members said they would vote to remain in the EU if there were a referendum now. Terry Scuoler, EEF Chief Executive, said that Britain’s membership of the EU was central to businesses and their investment plans in the short and long-term. He argued that “The clear message from manufacturers, who employ millions in the UK, is that we must lead on this and play an active part in shaping the EU from within.”

Similarly, a report by TheCityUK, the lobbying body for the finance industry, found that 84% of UK-based chief executives, board members, directors and partners from the financial and professional services sector want the UK to remain a member of the EU. 88% agree that EU membership economically benefits the UK as a whole. 95% say that access to the Single European Market is important to the UK’s competitiveness.

Having business speak up about the UK’s membership of the EU is long overdue but it is not surprising at all why they feel the need to do so.

The EU is a common market of 500 million customers. It is worth €12.6 trillion of GDP, which makes it the largest economy in the world, representing 25.1% of world GDP and 17.0% of world trade. The US in second position with 21.6% of world GDP and 13.4% of world trade. China by comparison is worth €5.5 trillion and Japan €2.7 trillion.

50% of foreign direct investment to the UK comes from other EU member states, and is worth £351 billion a year. Over 40% of our exports go to the EU and they are tariff-free. That will not be the case if we were outside of the EU, resulting to the loss of a major export market. 61% of UK car and commercial vehicle exports in 2011 went to the EU (727,146 vehicles in total). A study by the Department of Business Innovation and Skills found that 3.5 million jobs in the UK are linked to the Single Market.

Outside of the EU car exports will have to suffer 10% tariff and van exports a 20% tariff. Why would Nissan and Honda build their factories here then? Toshiyuki Shiga, COO of Nissan, which employs about 7,000 people in the UK, said last month that “The UK is part of the European Union — that’s very important. From the foreign investor’s point of view, I hope that the UK will remain an EU member”.

The Japanese government has been even more explicit. They said that “More than 1,300 Japanese companies have invested in the UK, as part of the single market of the EU, and have created 130,000 jobs, more than anywhere else in Europe. This fact demonstrates that the advantage of the UK as a gateway to the European market has attracted Japanese investment”.

The employment and income of British workers depends on the UK being part of the EU’s Single Market.

In the Single Market, EU business can rely on one set of rules, instead of 28. As a result, red tape and regulatory burdens are reduced and cross-border trade is made easier. A level playing-field and harmonised rules reduce compliance costs for firms that trade across borders, creating savings for business and consumers.

The Single Market makes a difference, 28 of Forbes’ top 100 companies are headquartered in the EU. The EU is top trading partner for 80 countries. By comparison, the US is the top trading partner for a little over 20 countries. More than 70% of imports enter the Single Market at zero or reduced tariffs. The EU is a champion of free trade.

All that increases our negotiating weight in WTO and in bilateral free trade agreements.

In 2003, the USA was forced to lift tariffs on UK steel producers by the WTO, which authorized the EU to impose counter-tariffs on US goods if the USA ignored the WTO’s ruling.

Ian Rodgers, Director of UK Steel said “I have absolutely no doubt that the President has only been forced into taking this decision by the certain knowledge that if the tariffs had remained in place beyond 10th December, he would have faced EU sanctions on €2.4 billion of US exports.”

28 EU states are able to achieve better trade deals when negotiating with one voice. Countries like China, India, Brazil are more inclined to give us a better deal because we represent a market of 500 million consumers, worth €12 trillion.

The EU and Canada just signed a trade deal worth over €25 billion per year, with bilateral trade expected to increase by 23% and the EU’s GDP by €11.6 billion per year. The agreement will remove 99.4% of the remaining tariff barriers on industrial goods and 93% of agricultural tariffs. David Cameron himself commented that “The EU has delivered its largest free trade agreement ever and proved that it can be an asset for British business”.

The EU-South Korea Free Trade Agreement will save EU exporters £1.35 billion annually in tariffs. It created €19 billion in new trade. UK companies alone benefit by £500 million per year.

The EU-US trade deal is expected to net an increase of 28% (or €187 billion) in exports to the US each year as well as increasing global trade, producing an additional 6% growth in exports for the EU. The total benefit is anticipated to be worth approximately €220bn and provide much needed job creation for both sides. The deal has the potential to create two million jobs across the EU.

Completing other FTAs currently under negotiation could add up to £75 billion to the EU’s GDP.

Being part of the EU offers the UK enormous economic advantages and strengthens our hand when negotiating trade deals. We must remain part of the biggest market in the world and work with our EU partners to strengthen and deepen it so it can deliver more for all the EU member states and their citizens.

 

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  1. Yes the CBI has just published its report and made the claims detailed. To balance that stance today (07/11/13) Digby Jones a previous director general of the CBI and Minister for Trade 2007-08 has written a leading article in The Times. In it he has called for huge reforms in the EU or for the UK to leave. One might assume he has some knowledge of the impact of such an action. He describes the EU as having destroyed job and that the CBI is deluding itself if it thinks that he fundamental reform that the aforementioned report calls for can be delivered. I would also point out that Mr Kennedy indicates that the CBI/YouGov survey dealt with 400 businesses employing 1.5m people. The UK has a total of 29.8m people in work (Office for National Statistics ), therefore this poll represents only 5% of all employed people and the 400 businesses a miniscule proportion of all businesses in the UK. The CBI is a lobbying pressure group and not some font of knowledge.

    But aside from the CBI, I notice Mr Kennedy fails to mention the Business for Britain group produced figures last week showing that 46% of UK businesses believes the EU costs outweigh the benefits and only 37% believe otherwise. Neither does he report on the views of the British Chamber of Commerce which reported that 77% of their members support a referendum (43% after renegotiation and 34% immediately), 61.4% do want to stay in EU but only if significant powers are returned to UK. “For the quiet majority of companies, the status quo is not an option. Ministers must pursue reform and renegotiation as a priority.” John Longworth Director General of BCC.
    In addition I assume Mr Kennedy is aware of the 56 business leaders who signed an open letter to Mr Cameron on the 24th January 2013 urging him to seek a looser relationship with the EU for UK business.

    To pretend there is a single business consensus regarding UK membership of the EU is at the least highly disingenuous.

    But some other numbers for Mr Kennedy. Approx. 85% of the UK economy is service based, one of the highest levels in the EU. This portion of our economy is not incorporated in the single market. (Despite UK calls for a service based single market for years this is rejected by the more protectionist countries.) Of the remaining 15%, about a third (5%) is exported from the UK. Using Mr Kennedy’s claim that 40% of our exports go to the EU that means 2% of the UK economic activity is with the EU. If we ceased ALL trade with the EU (and how likely is that?) then we would lose 2% of our potential market rather than the 4-5% claimed.

    But please who thinks trade would cease? The South Korean deal Mr Kennedy refers to is instructive. It gives South Koreans access to 98.7% (EU figures) of the single market, including trade in vehicles without the costs of membership that the UK must bear. The UK is a much bigger market for the EU than South Korea so why would both sides not be seeking a similar deal as already exists with the Koreans ? So the figures quoted suggesting the closure of the EU to UK seem a little unlikely, especially when one remembers that the UK is the biggest single market for German vehicle manufacturers, I suggest BMW, VW, Mercedes etc might be urging their government to push trade deals with the UK.

    Adopting a less partisan approach than either the CBI or BfB, Prof Iain Begg of the LSE has gone on record as saying that anyone who undertook an independent cost benefit study of the single market “would probably find that the economic plus or minus is very small.” (31/10/11) So again the 4- 5% seems a little excessive. But why should Prof Begg be of any interest to us. Well it was he who helped produced the oft quoted report that 3.5m UK jobs depend on EU membership that Mr Kennedy once again raises. The fact that he has repeatedly stated that leaving the EU would actually cost no jobs because trade would not cease and in any case the figures he used are now 23 years old and referred to an EU of only 14 states (which took 55.8% of UK exports) rather than the EU of 28 states that now takes around 40% of UK exports seems unimportant to the pro EU camp.

    The idea that the EU has increased the leverage the UK has in bilateral trade deals is laughable. The EU has actively blocked trade deals for years. Remember the 1998 New Trans-Atlantic Market Place talks in 1998 to provide a free trade agreement with the US which was blocked by certain EU states? Here we are 15 years on an already the EU is putting up reasons why we should once again block such an agreement (cultural defence, NSA eavesdropping etc.) We are still waiting for an agreement with China and India; agreements that the UK could have started negotiations on its own behalf years ago. (Even Iceland has managed a deal with China !!!!!) I certainly would not hold my breath for the EU to sign a free trade deal with the US in the near future.

    Yes the EU is a large economy, yes we would want to trade with them and they with us, but there is a much bigger vibrant world out there than just the EU and to pretend that somehow if we left the EU and UK would have nothing to do with each other is entirely unrealistic, yet it is this we are asked to believe.

    Outside the EU we would have no influence on their regulations, but that is already the case with every other country we trade with in the World yet somehow we trade 60% of our exports with them. (Interestingly enough of all the EU states we trade most outside the EU, most others have 60+% of their trade with other EU members.)

    “The British are solely concerned about their economic interests, nothing else. They could be offered a different form of partnership,” (Jacques Delors 28/12/12 Handelsblatt) By clear implication the EU is more than an economic structure. Yet Mr Kennedy has totally ignored the state building political aspect of the EU. Does he have any evidence at all that once membership of the EU is put into the context of a state with a single currency, fiscal policy, foreign policy, social policy, legal system etc there is anything like majority support for it in the UK. Indeed does he have any evidence that any further integration at all is acceptable to the UK electorate and that being the case how does the rest of the EU feel about the UK blocking further ‘progress’ ?

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