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 117.

    Not even 24 hours later and already firms in New York, Canada, California, Japan, and other financial hubs are downgrading their outlook for the UK's economy, and foreign corporations are making contingencies on whether or not they will need to move European HQs in order to service the EU. I suppose if all the jobs go to France and Germany and Ireland it will stop any immigrants showing up.

  • rate this

    Comment number 116.


    When you mentioned DC, NC and DM, the latter is sadly EM. Labour sure did pick the wrong brother - what a joker he is!

  • rate this

    Comment number 115.

    Do people seriously believe there'll be a referendum? Pure electioneering & nothing else.
    Anyone remember the words "I'll cut the defecit, not the NHS"? Well the NHS is being cut and the defecit has grown, carefully shrouded under cynical bookkeeping.
    The only safe way to interpret politispeak is to listen to what is said & then assume they'll do the polar opposite. You'll be right most times.

  • rate this

    Comment number 114.

    How many people bothered to vote in the last referendum?

  • rate this

    Comment number 113.

    Cameron and the Tories are an embarrassment: while Hollande speaks to French/German politicians (ie cooperation), our 'leader' is egged on by those who want to leave the game and take their ball home.
    The right wing nutters won't shut up until the UK leaves Europe. At bottom it's because they don't like Johnny Foreigner - he passes laws that protect the weak - and he's foreign, too,

  • rate this

    Comment number 112.

    Shall we scrap General Elections then?"

    The purpose of General Elections it to elect representatives who can act on our behalves based on their greater access to information and knowledge as well as a mandate to act on our behalves based on a manifesto they present. That is why we are known as a "representative democracy".

  • rate this

    Comment number 111.

    Its all irrelevant because this bafoon ain't getting re elected, and he knows it!

  • rate this

    Comment number 110.

    I shall never vote for the three main parties again.Used to vote Labour ( Blair and Brown ) changed that.Lib dems a complete waste of time.Voted conservative and ended up with this shower.Does anybody in this country believe in democracy,certainly judging by yesterdays PMs question time im afraid not.DC,NC and DM your a disgrace to democracy.Time for a big change for me.Hope many follow.

  • rate this

    Comment number 109.

    Just as information for those that keep quoting Norway and Switzerland as countries not in the EU doing well, they might not be in the EU but they have signed the Schengen Agreement meaning open borders with the EU.

  • rate this

    Comment number 108.

    We'll see how the Europhobes enjoy waiting in passport control queues. If EU splits &Britons have to endure what foreigners routinely put up with when landing here,you will have an Aha moment.My Italian friends recently waited 2 hours with an EU passport in the EU-friendly Q at Heathrow. It's bonkers to imagine you can divorce yet keep the benefits of unity. Not in my marriage! In or out? = Out.

  • rate this

    Comment number 107.

    Whatever DC says, it doesn't matter.
    Broken promises seem to be the norm.

  • rate this

    Comment number 106.

    No doubt Mr Fabius thinks he can roll out the red carpet: he seems a bit blinded by the swinging tax take that they expect to take from business & individuals.
    In reality this will have little effect on UK trade. We sell products because they're good & at competetive prices - our exports will still have to meet EU rules! We also import more from the EU; so they won't want to damage our market!

  • rate this

    Comment number 105.

    All I can say is, if it weren't for the EU, our banks would be in deeper trouble now. I think that says enough about the issue.

  • rate this

    Comment number 104.

    Red tape! Yeah, working conditions its called. 55 Tory business leaders can't wait to get rid of them, just like paying corporate tax. Cameron's off to DAVOS, where the gobal corporate leaders decide how to continue the exploitation of the working class, whilst pretending to have their interests at heart! You know you pay tax and they don't! Moral Hypocrisy its called, Cameron, Clegg full of it!!!

  • rate this

    Comment number 103.

    My former employer would've loved to be able to do away with maternity leave, paid holidays, the working hours initiative & have the ability to fire people on a whim. At least in the UK we have good access to affordable child care when all us working people have our hours forcibly increased...oh wait!?

  • rate this

    Comment number 102.

    Clever political move by Cameron - keeps his right wingers on side, hopefully wins over UKIP votes for the election in 2015. A little bit of uncertainty for businesses, and a chance to challenge Labour over a referendum. Perfect political moves, just like with expenses. Is it good for the UK? We'll have to find out.

  • rate this

    Comment number 101.

    The link being made between EU membership and future investment is a scaremongering myth and an attempt to deny the public a voice. If the economic climate is right, and given Britain's strategic global position( a hub), investment would flow in, especially if we are freed from the stranglehold of bureaucratic red tape.

  • rate this

    Comment number 100.

    Of course withdrawing from the EU will damage our economy - doh !

    This proposed referendum is all about Cameron trying to silence his lost backbenchers, and trying to claw back support from UKIP.

    Cameron is putting party interests ahead of the country.

  • rate this

    Comment number 99.

    The EU have just announced they want to control the British media. They already have decided to close our coal fired power stations and force us to import Russian gas or French nuclear power. They tell us where we can smoke and not."

    Absolute nonsense. And you think you are informed enough to make a decision?

  • rate this

    Comment number 98.

    You can get ''mixed responses'' for anything.... if you ask enough men if they want to stick an orange in their mouth and get horse-whipped with a leather strap... you'll eventually find some who'll say no!

    Any ''Business Leaders'' out there who are truly worried about this, I'd suggest they worry about their business instead. Save the debate for 2015 this is a marathon not a sprint!


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