Mixed response from business on Cameron’s EU gamble

DAVID Cameron’s promise of a referendum on Europe has been welcomed by the UK’s two major business organisations.

But there are also concerns that it will create uncertainty and harm smaller firms.

The Prime Minister has promised an “in/out” referendum on Europe by the end of 2017 if the Conservatives are still in office.

He is seeking to placate the eurosceptic element of his party and use the prospect of Britain leaving the European Union as a bargaining chip to negotiate reforms.

Damian Waters, the Confederation of British Industry’s North West director, said: “The EU single market is fundamental to Britain’s future economic success, but the closer union of the euro zone is not for us.

“The Prime Minister rightly recognises the benefits of retaining membership of what must be a reformed EU and the CBI will work closely with government to get the best deal for Britain.”

Simon Walker, director general of the Institute of Directors, said: “The Prime Minister’s approach is realistic and pragmatic. The British public, and many of our members, are sceptical about many of the institutions and practices of the EU. We need to put their doubts to rest.

“Free movement of goods and people is enormously important for the British economy, and we need to preserve that situation. At the same time, there are serious concerns about large amounts of costly regulation being introduced through unaccountable processes.”

He added: “It is far better to deal with these issues than to shy away from them. British business is resilient. It is flexible and it can cope with change – or uncertainty. The eurozone crisis is the source of far more uncertainty than a referendum. Most IoD members export, the majority of them to the EU. It is in everyone’s interests for that trading relationship to continue – and I am sure it will.”

But Deloitte’s UK chief executive David Sproul was less enthusiastic. He told the BBC: “The Europe debate does not help to create certainty. There is no question it will impact business. It will hit investment into the UK.”

There was also concern from the Forum of Private Business, which represents smaller firms. It said a total exit would be bad for UK SMEs, but warned anti-EU sentiment would grow without reforms.

Head of policy, Alex Jackman, said: “The Forum of Private Business does not support an ‘in/out’ referendum, simply because we don’t think it will give anything like a clear mandate.

“Even an overwhelming ‘in’ wouldn’t silence the doubters, nor an overwhelming ‘out’ lead to exit, given the political flip-flopping over this issue of recent years. And in all probability, there wouldn’t be a significant majority one way or the other.

“But unless the UK can renegotiate terms, anti-EU feeling will grow. Institutions that are already seen as undemocratic will grow to become tyrannical in the views of many. The ever-spiralling central budgets will create even louder dissenting voices than at present. So the issue must be tackled.”

Paul Hyland,  partner at Liverpool accountancy firm Duncan Sheard Glass, said: “It was a finely balanced speech but one which will send shivers down the spine of any business which depends on access to the single market, a market which is, let us remind ourselves, our biggest single trading partner.

“Many, many businesses in Liverpool depend entirely or largely on a European customer base. To jeopardise that market seems unwise, to say the least.”

Nigel Hibbert, executive director at Cheviot Asset Management in Liverpool, said: “David Cameron has made it clear that he wants to stay in Europe – but on his terms – and is at last addressing the existing uncertainties which have dogged our relationship for years.

“An optimistic view might be that Cameron’s approach will lance that boil; a pessimistic one that he has increased uncertainty for the many businesses which rely on Europe – at a time when business remains very challenging.”