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 137.

    By investment do they mean more of our utility companies being bought by French and German companies? if so they can keep their money.

    Are China in the EU? nope, didn't think so. China is bankrolling the US economy and Chinese firms own a few companies in the UK. Indian companies own a UK companies too.

  • rate this

    Comment number 136.

    To #99: if the EU have announced that, where are our representatives? A demagogue like Farrage represents only himself, not us. UK suffers not because Brussels dictates, but because our representatives do not stand up for us and we don't know what they are doing. Elect responsible people and hold them accountable, then it won't feel like a dictatorship. Put something in, you'll get something back.

  • rate this

    Comment number 135.

    The Sun is the UK's best selling newspaper. These are the kind of uninformed idiot people this decision has now been handed to. Chilling.

  • rate this

    Comment number 134.

    Is there now way where we can negotiate with the EU to still have a common market but not to obide by the laws and regulations that they impose? If there isnt then i'm all up for leaving the EU. I also agree with 86. Metzalin. Maybe others can leave the EU and join us to be part of the UK, although the Union flag might get a bit complicated if too many join!

  • rate this

    Comment number 133.

    @El Matador

    'the latter is sadly EM. Labour sure did pick the wrong brother - what a joker he is'

    Neither of them are electable. They're both tainted by the 1997 - 2010 imbecility that landed us with 180bn quid annual deficits and the deepest recession in 80 years.

    The only people more unelectable would be Ned Balls or Gordon Brown.

  • rate this

    Comment number 132.

    "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"

    Good luck convincing the CEO and top managers to move to France and to hand over 75% of their salary.

  • rate this

    Comment number 131.

    Was anybody else surprised at how unprepared Ed Milliband was. His no referendum pitch will haunt him and I bet it will change before the election.

  • rate this

    Comment number 130.

    @92. Well said. Cameron is playing party politics here, it being a short term ploy to give the shower he leads some hope at the next election by moving onto UKIP ground. He's playing a dangerous game with our economic future here.

    Sorry scratch that, it's what he's been doing for the last two years anyway.

  • rate this

    Comment number 129.

    105. Cheddy

    If it were not for the EU we would be better off.. not only smaller businesses unbound by EU treaties.. but the 65.2 Bn a year we give them which could be much better spent towards helping this country get back on its feet, as for that... the Common market is available to everyone in the world.. and even if trade drops.. free to trade with the rest of the world. will see a boom here

  • rate this

    Comment number 128.

    It has always been "what's in it for me?" across the EU membership: France treats the EU like a piggy bank for CAP, smaller land-locked countries next to France and Germany will always be keen, banana economies like Greece just wants the loan again and again.

    UK did badly under Blair when he gave away much to the EU with nothing to show for, except for his own social standing amongst EU leaders.

  • rate this

    Comment number 127.

    "Britain can't just opt out of all the regulations and then expect to compete based on longer hours of work and lower standards."

    The above is an admission that these regulations do, in fact, reduce efficiency and competitiveness. Here's a thought - economic inefficiency creates high unemployment and increases our welfare bill which both act to reduce net wages

  • rate this

    Comment number 126.

    97 Stephenruss
    Regretably your argument is a fine example of not knowing the full facts and understanding the make up of a country - like Canada, US, China, Brazil & Russia thay are one of the biggest countries in the world with huge resources hence their ability to succeed to a point so saying we could be same is fictional

  • rate this

    Comment number 125.

    I'd suggest that the only "red tape" concerning big business in Europe is that which would surround extricating their taxable money out of the UK! It is a fact of EU business life that we "export" more income to the EU than our annual GDP!............. and that would be somewhat curtailed if we leave the EU!

  • rate this

    Comment number 124.

    It's clear that Cameron wants to stay in the EU this is just done to please the backbenchers and curb the Ukip vote, personally I cant see him getting a better deal for us in Europe you can't have your cake and eat it, although I am all in favour of any kind of referendum my gut instinct is we need to stay part Eu, especially as its our biggest trading partners. We need a proper debate on this.

  • rate this

    Comment number 123.

    What I'm hearing from many politicians is a disgrace. whether you believe in the euro or not to deny the people the right or choice of how their lives are run would be a disgrace. How dare people try and deny me my voice, my right to choose how I want to e governed.

    We should not be dictated to, it's what my grandfather and many others fought for to prevent this kind of imposition.

  • rate this

    Comment number 122.

    The people in charge of the EU realise just how undemeocratic and unpopular it is. If every country help refferendums it would fall apart. Rather than something evolved to act for the good of the man on the street its a grandiouse project for the political elite. Maybe an 'out' result is what it needs to knock some sense into it.

  • rate this

    Comment number 121.

    34. Little_Old_Me

    'some issues are too important to be left liars, obfuscators and the unwillingly mislead.'

    So how does this fit in with local elections for MPs?

  • rate this

    Comment number 120.

    Time to start building some Spitfires.

  • rate this

    Comment number 119.

    From a business view, I work for a small/medium manufacturing company, we buy some parts in from EU, subcontract to other UK businesses and sell to the rest of the world. The EU is a dead zone for us and getting worse. The rest of the world is marching forward.
    Personal view, money is wasted keeping far to many people on the gravy train. I see nothing that could not be done better at the UK level.

  • Comment number 118.

    This comment was removed because the moderators found it broke the house rules. Explain.


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