AS David Cameron looks to reach a final agreement with the European Council today in Brussels on the terms of Britain’s EU renegotiation, the CBI will play an active and balanced role in the referendum debate.
We speak on behalf of 190,000 firms, together employing around seven million people in the UK – the vast majority are small or medium sized and across every conceivable industry.
The vote is of course in the hands of the British public, but based on the biggest consultation and research project in the CBI’s 50 years, it’s clear that the majority – although not all – of our member companies wish to remain within a reformed EU. There are lots of different economic studies about the EU to consider, drawing varying conclusions about the benefits and costs.
The CBI’s economists have carried out an in-depth review of the most credible academic studies available on the overall impact of EU membership on the UK economy and find a credible range of net benefits of between one and nine-and-a-half per cent of GDP.
We judge that the net benefit of membership on the basis of these studies is therefore most likely around four to five per cent of GDP per year – the equivalent of between £73 to £91bn – which works out at around £3,000 per household. That is roughly equivalent to the size of the economies of the North East and Northern Ireland combined.
While the EU certainly has its frustrations for businesses, access to a market of 500 million customers has been crucial to the fortunes of hundreds of small and medium-sized firms in Yorkshire and the Humber who export or form part of massive supply chains.
Think of the fantastic access HumberPort gives the region’s businesses, transporting goods to and from mainland Europe and Scandinavia together with some of Europe’s largest integrated shipping and logistics networks.
Those firms which do not directly export may not necessarily see how their business is benefiting from the EU.
But you can bet that businesses higher up the chain are doing exactly that – selling in Europe – meaning that this link is crucial to the success of the firms across the entire chain.
And, of course, trade with the EU boosts UK prosperity generally and indirectly means that people have more cash in their pockets to spend in local shops, cafes and restaurants throughout Yorkshire.
Being part of the EU Single Market also means customers have a greater choice of products and services which drives more competitive prices. And EU standards have led directly to safer and more environmentally friendly products, from our fridges and ovens to medicines and transport vehicles.
Those calling for a “Brexit” must offer a credible explanation of how a new relationship will look and how the UK will not lose out economically.
Some suggest we have a Norway-style relationship with the EU, but they still pay much into the system in return for no control over the rules. And it took Switzerland nine years to renegotiate individual trade deals with the EU, which still don’t come close to matching the benefits of being inside the largest trading bloc in the world – both are obliged to still apply freedom of movement rules.
The UK could, of course, compete outside the EU, but the question is would the levels of investment, growth and jobs be the same as we have enjoyed on the inside? There is much that the EU must do to reform and become more competitive and outward-looking. While progress has been made on the burden of regulation, more can be done.
We want to see more trade deals being agreed with the rest of the world and the single market completed – which delivers barrier-free trade to sell in Europe.
We want to see the EU doing less where it doesn’t add value – lifestyle and employment issues in particular. The draft deal is certainly a big step in the right direction on these issues.
The CBI and its members have been making the case for these reforms, to make the EU better for business. We have been to capitals across the Continent and have found a widespread appetite for change.
While business will wait to see the details of any final deal, the Prime Minister’s ambitions to create a more competitive and outward-looking EU are making clear progress.
Lucy Thornycroft is director of the CBI in Yorkshire and the Humber.