Cameron EU speech: Business leaders give mixed messages


PIMCO boss Mohamed El-Erian: UK faces an ‘uncertainty premium’

Some business leaders have warned that David Cameron's EU referendum proposal will hurt investment, but others have backed the prime minister's move.

The head of US-based investor Pimco, Mohamed El-Erian, said it would raise the UK's cost of borrowing in markets.

However, a group of 55 British business leaders have written an open letter to the Times throwing their weight behind Mr Cameron's strategy.

Mr Cameron is due to speak at the World Economic Forum in Davos later.

He will use his keynote address to set out the UK's priorities for its chairmanship of the G8 in 2013 and to call for international co-operation to make sure that global companies pay their fair share of tax.

He will make clear that he wants to focus on economic priorities - trade, tax and transparency - as measures that will enable countries to compete in the current market.

'New relationship'

But it was his speech on Wednesday that is likely to be of more interest to the Davos audience of business and world leaders.

Mr Cameron said the British people must "have their say" on Europe as he pledged an in/out referendum if the Conservatives win the election.

Start Quote

The only thing that's damaging to British business is the march of regulation, which weighs industry down”

End Quote Lord Wolfson Conservative peer and Next chief executive

The prime minister said he wanted to renegotiate the UK's relationship with the EU and then give people the "simple choice" between staying in under those new terms, or leaving the EU.

In their open letter, the group of top UK bosses endorsed his view.

"We need a new relationship with the EU, backed by democratic mandate," said the group, which includes the chief executives of B&Q owner Kingfisher, mining group Xstrata, electricals retailer Dixons, the London Stock Exchange and beverages maker Diageo, as well as the chairman of engineering firm Rolls Royce.

The executives complained about the red tape burden imposed by Brussels, and claimed it was the right moment "to push for a more competitive, flexible and prosperous European Union that would bring more jobs and growth for all member states".

The UK's biggest business organisation, the CBI, also expressed support for the mooted in-or-out referendum.

'Suffer the consequences'

Start Quote

David Cameron wants to use his keynote address here in Davos today to call for international co-operation to make sure that global companies pay their fair share of tax. But, the movers and shakers meeting here may be more interested in what he said yesterday about Britain's future in the European Union”

End Quote

However, other business leaders - including the British manufacturers' association, the EEF, and the UK head of the accountancy firm Deloitte - echoed the concerns raised by Mr El-Erian.

Speaking on the BBC's Hardtalk programme, Mr El-Erian - who heads the world's biggest investor in bonds, based in California - said the UK would "certainly suffer the consequences" if it exited the EU, including lower growth and lower investment.

But he said the uncertainty generated by the possibility of an EU exit years in the future would also be damaging.

"People like us start putting in an uncertainty premium," said the US-based fund manager.

"If we're going to make investment decisions, the uncertainty premium associated with that goes up when you're not sure what the relationship between Britain and Europe will be."

'Clarity needed'

If it goes ahead, the referendum is due to be held between 2015 and 2017.

David Sproul, the UK boss of Deloitte, said: "The Europe debate does not help to create certainty.

John Maguire asked the people of Bristol for their views on Europe

"When I talk to US clients who have not been immersed in the European debate as we have, they say that what they need is clarity. There is no question it will impact business - it will hit investment into the UK."

Sir Andrew Cahn, the former chief executive of UK Trade and Investment, went further, calling the next five years a period of "investment chill."

"If you don't know whether Britain is going to be a full positive member of the European Union in five years' time, you'll wonder if you want to make that additional investment," he said.

Other business leaders were supportive of the government. Lord Wolfson, the boss of the retail chain Next and a Conservative peer, described worries of uncertainty as "nonsense".

"The only thing that's damaging to British business is the march of regulation, which weighs industry down," he said.

Single market

In response to Mr Cameron's announcement on Wednesday morning, the French foreign minister Laurent Fabius said his country would "roll out the red carpet" for businesses who may be less keen to invest in the UK in the event of an exit.

But, during his speech, David Cameron repeatedly insisted that the European single market would be at the heart of any new treaty with Brussels, billed as the alternative to exiting the union.

"Continued access to the single market is vital for British businesses and British jobs," he said.

Cameron's proposals

  • He plans to renegotiate parts of the UK's relationship with Europe, arguing for fewer powers for Brussels
  • He will then put that changed membership package to the British people
  • The referendum will be a straight in-out question
  • He will campaign to stay inside the EU - provided the other 26 members have agreed to his changes

Since it began 20 years ago this month, the single market has established free movement of people, money, goods and services throughout the EU, a market that now includes 500 million consumers in 27 countries.

Working hours

Most business leaders agree with the prime minister that the UK needs to retain its place in that market, especially if it wants to continue to attract so much foreign investment.

"The vast majority of businesses across the UK want to stay in the single market, but on the basis of a revised relationship with Europe that promotes trade and competitiveness," said John Longworth of the British Chambers of Commerce.

The EU says the result of the single market has been a rise in quality, and a reduction in prices.

It claims that the cost of a mobile phone call has fallen by 70% since the single market came into operation, and the cost of a plane ticket has fallen by 40%.

One of the issues the government will examine is the issue of working hours. An EU directive, incorporated into UK law, limits the amount of time that most people work to 48 hours a week.

Should the government decide to repatriate that power, businesses might have greater freedom to ask their staff to work longer, a move that would be highly controversial.

"The working hours of British doctors should not be set in Brussels," said Mr Cameron.


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  • rate this

    Comment number 757.


    "We had a vote to join EU..

    No we didn't.

    "We have benefitted financially.. "

    Prove it

    "Britian is no longer an empire so stop the `little englander' mentality .. "

    Little englanders were anti-empire, so fail

    ".. the tories hate the fact that being a member of the EU means they are no longer in total control of this country..."

    Its not Tory policy to leave the EU

    0/4 Must try harder.

  • rate this

    Comment number 756.

    Apparently a comment from France was made along the lines of "you can't join a club and then expect the rules to be changed to suit you".

    Fair enough.

    But under that analogy, if the club's rules change to a point where you disagree with them, haven't you the freedom to leave?

  • rate this

    Comment number 755.

    Why are people so keen for a referendum to decide how "their lives are run"? We have never asked for a referendum on more important issues affecting i.e. the current austerity plans, yet we are all so keen for a referendum on Europe. Does Europe really affect our lives so negatively? I could think of better policies/laws for us to have a referendum on - Gove's Education reforms, for a start.

  • rate this

    Comment number 754.

    @735.Trout Mask Replica
    removal of barriers, not Brussels dicatorship"

    Can you give examples of specific harms this alleged "dictatorship" has inflicted on you? Compare them with Westminster inflicted policies like student fees, pension reforms blah blah..
    Stay on topic TMR - we're discussing the EU.

    Examples - uncontrolled immigration, red tape, £2m an hour cost...

  • rate this

    Comment number 753.

    Reasons for withdrawal from the EU include ......Never having had a surplus on trade in any fiscal year with the EU . Net loss per year now exceeding £12. Billion EU Auditors refused to sign off audited accounts for 17th successive year , not wishing to be party to the multi billion £ fraud endemic to accounts . Britain having to take millions of the EU's unwanted citizens .

  • rate this

    Comment number 752.

    Even the trade figures are distorted by the Europhiles. They say 50% of our trade is with the EU, a deliberate con. 20% of these EU exports are actually exports to the rest of the world shipped through EU, it’s called the “Rotterdam/Antwerp” effect.. So the real figure is around 40%.Thus the value of worldwide UK exports going outside the EU is 50% greater than UK exports going TO the EU.

  • rate this

    Comment number 751.

    We had a vote to join EU we don't need another one.

    We have benefitted financially from membership.

    Britian is no longer an empire so stop the `little englander' mentality and grow up.

    Just because the tories hate the fact that being a member of the EU means they are no longer in total control of this country is no excuse to leave.

  • rate this

    Comment number 750.

    Markj161: spot on. That was my point. The Davos lot [watching on screen as we banter on here] are spouting their nonsense while their brokers are already devising a strategy to accumulate. It is always the vulnerable who will pay for all this grand-standing. Monsieur Farage is an ex-trader nes pas? There you have it...

  • rate this

    Comment number 749.

    Cameron in 2012 on Scotlands referendum:
    "Uncertainty over a referendum result can have a detrimental impact on the economy."
    "If Scots desire greater control over their own affairs, they will have no option but to choose independence."
    "Stop dithering about an independence referendum."

    Is his proposal damaging the economy?
    Is devo max acceptable to other EU members?
    2017? Is he dithering?

  • rate this

    Comment number 748.

    Currency exchange rate can be explained by Political Rhetoric.
    The Pound bought 1.28 Euros last July, it buys 1.18 Today.
    Against the Dollar we are looking better 1.62 May 2012, 1.57 today.
    Last time I bought Euros got 1.35 for the Pound and that was the Tourist rate, think that was 2008?

  • rate this

    Comment number 747.

    How many workers in the car plants and aerospace industries in this country want the UK to leave the EU?
    A vote for exit will lead to a swift visit to the jobcentre as the car manufacturers and aerospace industry will leave along with other multi-nationals employing how many Brits?
    Nationalism or patriotism does not pay the bills or feed you.
    Following economic sense does.

  • rate this

    Comment number 746.

    Europe is fine, but the Commonwealth is a better potential trading partner and they like us (mostly).

  • rate this

    Comment number 745.


    "... In the 4 months prior to July it rose by 10c. Were you on here praising Cameron?..."


    You know why that was, don't you? Most currencies rose against the euro then, and its problems are now being resolved by coherent action. If you remember, DC made a very silly veto around that time to frustrate that work. For what would all but an idiot have commended commend him?

  • rate this

    Comment number 744.

    730 trout

    "The services chapter of the trade deal is set to become a new benchmark in services negotiations...The EU has sought Singapore's best current commitments and has additionally obtained valuable new commitments in a range of sectors...European service suppliers will thus enjoy the most preferential conditions for access to Singa. market."

    So FTA's dont include services eh?

  • rate this

    Comment number 743.

    All I will say on this issue, as clearly we are never going to agree is this;

    I was listening to a French news radio programme, and like it or not, and for the 1st time ever they got the name of the country right, and not just called it England, they said that the “I Want, I Want” policy of the UK is like a child pestering its mother at Xmas, not sure I disagree, but France your the same

  • rate this

    Comment number 742.

    Having lifed in France for many years, I've learnt that the France pick and choose what EU laws they follow, I believe they are in the wrong by saying we should not cherry pick our membership when they and the Germans do that very thing, i believe in the EU but it has lost its way and is not a fair society, These days the French and the Germans are better treated that other citizens of the EU.

  • rate this

    Comment number 741.

    the sooner we are out, the better

  • rate this

    Comment number 740.

    Cameron is driving the UK towards becoming a third world country. His backbench friends would be happy with that because leaving the EU would accelerate the processes creating a toffs vs serfs split which has been underway in the last two years. When the UK ends up as a North Korean-style state with mass starvation as the norm, the toffs will be able to celebrate.

  • rate this

    Comment number 739.

    JasonEssex, ehm...mine got it right....[tin hat on]. My point wasn't confrontational, I have lived in other countries and seen a lot destroyed by mindless, cheap patriotism because, outside personal relationships, one should never take decisions with the heart but always with the brain. P.S. The FSA? A running joke if you ask me...

  • rate this

    Comment number 738.

    As the Euro members "club" move closer together, the remaining member states have to form a different "pact".

    In this respect its good to see the UK acknowledging this.

    Euro land fiscal "creep" can not impact the non Euro countries so further rounds of negeotiations and agreements will HAVE to be had.


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