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 177.

    Listing a mobile phone call & the price of an airline ticket are a low priority with most people."

    Well, about 12 million Brits a year benefit from these (plus the unlimited imports they can bring back). How about car prices: before the EU intervened there was a cartel of car manufacturers deliberately keeping car prices and servicing higher in the UK than elsewhere in the EU.

  • rate this

    Comment number 176.

    Some Businesses (including Media) care only for their Shareholders profits and themselves - NOT the Public.
    The ordinary PEOPLE of the UK will be FAR better off with a different relationship with the EU.

    Anyway - NO decisions have been made yet - so why the panic?

  • rate this

    Comment number 175.

    I feel that the problem goes back to Britain's membership of the EU in the seventies. Most people didn't really want to join but felt that there was no alternative due our poor economic performance. As the EEC became the EU and progressed the a free trade area to a political union we have become more hostile as the dead hand of Brussels dominates our lives more and more as each year passes.

  • rate this

    Comment number 174.

    The 'red tape' and 'regulation' burden these poor businessmen have to face is mainly workers rights, they don't like paying for annual leave or paid maternity, heck, they don't like paying a minimum wage. They won't have to anymore thanks to the Tories and an ill-informed British public.

    When you find yourself in a sweatshop in a decade's time, remember, you brought this on yourselves.

  • rate this

    Comment number 173.

    To say it is bad for UK businesses to leave the UK is absolutely ridiculous! Before Europe had an established EEC businesses all across Europe traded and businesses was successful, so no business would suffer, Norway left the EU and Member States in the EU still trade with them. If you have a product that the consumer likes at an affordable price they will buy that product.

  • rate this

    Comment number 172.


    'and have the ability to sack them at the drop of a hat'

    Be honest though. If you were running a business you'd want the ability to sack people at the drop of a hat too.

    I certainly would.

    It's the inability to get rid of people that stifles employment in the first place. See France for details.

  • rate this

    Comment number 171.

    The link being made between EU membership and future investment is a scaremongering myth and an attempt to fool the less informed public into voting on mass for a single state Europe which will solve all our problems... look where the EU has got us so far!

  • rate this

    Comment number 170.

    Outside the EU the UK would still have to abide by EU rules and regulations(over which we would have no input or influence) to trade into the EU as Norway & Switzerland have to.
    Indeed, and if you press them on which laws and regulations they wish to opt out of all they can think of is the working time directive.
    A pathetic attempt to undermine workers rights.

  • rate this

    Comment number 169.

    The EU is just a way for failed or disgraced politicians (Kinnock, Mandleson and Brown if he could have got away with it) to make money after they have been found out. The trouble is we are footing the bill.

  • rate this

    Comment number 168.

    Quite a funny article really - Cameron goes to Davos to "to call for international co-operation to make sure that global companies pay their fair share of tax." - whilst Diageo: a company which the Guardian and Independent has previously reported went 'dutch' to avoid tax!, backs Cameron! Is that the definition of an oxymoron? or was that Ed's 'no referendum' being a case of no doesn't mean no??

  • rate this

    Comment number 167.

    For investment read: selling the country to foreigners. Why does an economy of our size need it. We should be doing the investing. The government should also be far more concerned with helping smaller business and less with tax breaks for multi-nationals.

  • rate this

    Comment number 166.

    I think people in the UK must understand that Cameron is NOT working in THEIR interests but HIS OWN AND HIS PARTY'S!!
    What he is doing is purely for a Tory agenda and NOT the UK people!
    He is proposing changes WITHOUT consulting US - we will not be able to reject those proposals UNLESS he loses the election (he probably will anyway!) or, we leave the EU altogether on a vote - a very bad idea!

  • rate this

    Comment number 165.


    and what will you do with the squadrons of Spitfires that you built? Use them against whom?

    oh wait, who will fly them?

    recruit pilots from public schools, from Eastern Europe like Poland and Czechoslovakia?

    Czechoslovakia don't exist anymore, from both resultant countries then?

    and what exactly is your point with the Spitfires?

    Use them against France this time? Or the EU?

  • rate this

    Comment number 164.

    The problem here is that everyone will exaggerate and scaremonger with their own particular stance. This is where we need the media to provide in depth independent information. The BBC should do that if it is truly unbiased.

  • rate this

    Comment number 163.

    Maybe David Cameron should allow the Scottish people the option of having more powers then give them the option of complete independence... pig should fly. Hypocrite.

  • rate this

    Comment number 162.

    For 'red tape' and 'regulation' read your rights & conditions as an employee. Of course many business owners want you to have less of those. I am quite shocked by how much working conditions have deteriorated since I entered the workplace in 1988. Seems that's not enough. To remain 'competitive' we need to pay you the barest minimum (preferably on regional pay scales) and fire you at will!

  • rate this

    Comment number 161.

    This is a boil, like Scottish independence, that needs to be lanced one way or another. It's to Cameron's credit that he's prepared to do something about it, unlike Milliband who's performance at yesterday's PMQs was pathetic.
    The idea the UK wouldn't continue to enjoy free trade with the EU if it left is preposterous. On my street yesterday, 8 out 10 cars parked were German, the other 2 French!

  • rate this

    Comment number 160.

    One problem of leaving the EU will be the number of non-EU multinationals moving their European manufacturing and HQ bases from the UK to an EU country. The Japanese rescued our motor industry solely to access the EU and they are not alone. A shame that Cameron didn't offer a third option: stay in but less reliance on Brussels law and a total block on non UK courts interpreting UK legislation.

  • rate this

    Comment number 159.

    No facts or figures available , just unsubstantiated scare stories from both sides. How on earth am I supposesd to decide? The only thing I have to go on is that Germany and Goldman Sachs wants us to stay in ( on their terms) , France and Belgium want us to go.

  • rate this

    Comment number 158.

    Apparently a free trading nirvana awaits by unleashing the energies and innovation of Brits if only we could rid ourselves of the jackboot of stultifying red tape imposed by those unelected bureaucrats in Brussels. Funny that Germany and Finland have plenty of energy and innovation despite these same rules and we didn't exactly demonstrate these traits in the 1950s and 60s before joining the EEC.


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