What impact could the EU referendum have on businesses?

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Britain is to decide whether it will remain within the European Union this summer, as announced by PM David Cameron last week.

Campaigns are now in full swing for both those wanting to stay and the British Exit (Brexit) arguments. The prime minister is heading the ‘stay’ campaign, while London Mayor Boris Johnson is campaigning to leave. However, according to current polls, the public opinion is divided down the middle.

In this guide, we look at both the arguments for leaving the European Union and those in favour of staying.

What is the EU referendum?

Prime Minister David Cameron announced that Britain would decide whether or not to stay in the European Union on 23rd June. The question being posed to voters will be ‘should the United Kingdom remain a member of the European Union or leave the European Union?’

Cameron is campaigning to stay within the EU and has already agreed a deal with Brussels to change certain aspects of the UK’s membership. This deal includes changes to child benefit, migrant welfare payments, limits on free movement and sovereignty including others and will be effective immediately if the UK decides to remain within the union. Those in support of the British Exit, or Brexit campaign, are arguing that Britain will be better off under free-rule, able to make its own decisions independently.

British, Irish and Commonwealth citizens over the age of 18 who reside in the UK will be eligible to vote alongside members of the House of Lords, UK nationals who have lived abroad for less than 15 years, and Commonwealth citizens in Gibraltar.

What about businesses?

Big businesses appear to be leaning to Britain remaining in Europe. In a survey of 3,800 businesses conducting by the Financial Times last year, 63% believe leaving the EU would have a negative impact for Britain. Pro-Europe campaigners argue that leaving the EU would threaten jobs and lead to less investment in the UK.

Business for Britain, led by the former chief executive of the think-tank, the Taxpayers’ Alliance and funded by the Daily Telegraph, claims ‘exists to give a voice to the large, but often silent, majority among Britain’s business community who want to see fundamental changes made to the terms of our EU membership.’ Its supporters included Helena Morrissey CBE, Harriet Bridgeman CBE, John Freida, Peter Simon, founder of Monsoon and Peter Goldstein, founder of Superdrug, amongst others.

Since the announcement of the EU referendum, 198 companies within the FTSE 100 have signed a letter addressed to The Times, backing Britain to stay in the EU, including BT, Marks & Spencer, Vodafone and Heathrow and Gatwick airports. “Business needs unrestricted access to the European market of 500 million people in order to continue to grow, invest and create jobs. Britain will be strong, safer and better off remaining a member of the EU.”

In a letter to the Evening Standard, 50 prominent and successful women argued the case, suggesting that everything from imports of food produce, trade tariffs and a diverse spectrum of employees would be affected if Britain were to leave the EU.

Founder of lastminute.com, Baroness Lane-Fox wrote, “Leaving the EU would be a disaster for the next generation of British entrepreneurs.”

“Being in Europe means we can trade without tariffs and there are a common set of regulations across 28 countries. And as a mammoth market of 500 million consumers, we can negotiate free trade agreements with countries like the US, China and Australia.”

Carolyn Fairbairn, the Director General of the Confederation of British Industry (CBI) said, “Looking ahead to the UK’s forthcoming referendum, it is for the British people to decide the outcome but European business strongly supports continued British membership of an EU that takes the necessary reforms to be competitive, outward-looking and continue delivering growth, jobs, peace, security and prosperity for all.”

Those in support of remaining within the EU argue that leaving will put British jobs at risk. As part of David Cameron’s EU deal, there are safeguards in place for the City of London, protecting the large financial services industry to prevent Eurozone regulations being imposed on it.

While big businesses argue for Britain to remain, many small and medium businesses (SME) are leaning towards an exit. According to a report conducted for Business for Britain released in September last year, two million SME leaders believe that the EU is hindering their business.

Those businesses wanting to move away from the EU argue that leaving could lead to less red tape and bureaucracy. Leave.EU campaigners argue that the UK would have the freedom to make its own global trade deals. They claim that the UK’s exports to non-European countries are growing at double the rate of exports to the EU.

Research from think-tank Civitas found UK export growth in the single market area was 22.3 per cent lower following the creation of the European Union in 1993 than it would have been had it continued at its trend rate during the Common Market years.

Speaking on the benefits of a British exit for Leave.EU, Leave.EU ambassador Caroline Drewett said, “As a ‘millennials’ columnist for a financial magazine, I understand how much better off young people will be, not only financially, but also in terms of enhancing career prospects and broader opportunities if Britain leaves the EU.

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Alison Simpson
About the author

Alison is the Digital Content Editor for WeAreTheCity. She has a BA Honours degree in Journalism and History from the University of Portsmouth. She has previously worked in the marketing sector and in a copywriting role. Alison’s other passions and hobbies include writing, blogging and travelling.

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