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 277.

    Ur just upset that I pointed out a bit of history to u.".

    Your knowledge of history and the lessons for today is extremely poor as you keep showing. The industrial revolution was founded on the 17C (state sponsored) scientific revolution, funded by the profits from slavery (sugar plantations), required parliament to legislate to help it and only 5% of the population could vote.

  • rate this

    Comment number 276.

    Within living memory Europe was torn by a tremendous war, if the EU helps prevent a repeat then we should go with it and work together to improve life for people living within the EU as a whole.

    The UK with its cosmopolitan population can really contribute here.

    The money side of it is not the central issue here.

  • rate this

    Comment number 275.

    164. AlErgic
    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.
    But given that the education system is failing - isn't it? - will people really understand in depth information?

  • rate this

    Comment number 274.

    Isn't it time to emphasise that 'we are not alone' in our views of this bureaucratic gravy train..?

  • rate this

    Comment number 273.

    This might not be terribly popular, but.....

    It should not be up to business owners, especially BIG business owners to dictate whether we stay part of the EU. Executive power to govern comes from the PEOPLE, not from business owners.

    If you give these people undue influence over the governance of the country then we might as well have been taken over by global banks (who brag they have)

  • rate this

    Comment number 272.

    The stock market response to the speech, both yesterday and today is positive. It is clear that the we have to cut the costs of doing business in the EU in order to compete with the likes of China. Mr Cameron has created an opportunity for this vital issue to be addressed in the interest of all member states. This is why the market response is so positive.

  • rate this

    Comment number 271.

    Dear messrs Cameron , Celgg , Farrage , Milliband et al, I am not entirely stupid so do you think you could kindly put forward your factual arguments for either staying in or getting out? Or are you going to descend , as usual, into a point scoring , peronalised ,slanging match which makes I`m a celebrity , get me out of here , look like a reasoned debate?

  • rate this

    Comment number 270.

    The only reason these 55 Business leaders would want to get out of the EU is so that they can if the Tories are Elected at the next General Election impose the most Draconian attack on Workers rights in Generations, Minimum Wage abolished, No right to strike, NHS privatised among many other possibilities, Cameron and IDS and Co really do love the Victorian Values, Be Aware!

  • rate this

    Comment number 269.

    The working time directive is just that a 'directive'. I used to work for a large telecom company and did overtime - lots of it and got a lot of money for it. Then the WTD came in and no more overtime above the directive. Not good. This stops individual choice and reduces competitiveness.

  • rate this

    Comment number 268.

    Now that the little-Britainers have got their way (albeit in at least five years' time) I want my way too. So, I want a referendum on our membership of NATO and the UN. I've never had the chance to vote on our membership of a corrupt club whose constitution says "all nations are equal but five are more equal than the others".

  • rate this

    Comment number 267.

    If we leave Europe what status will the people have who have gone to live there and their property and also the immigrats who have settled here.

  • rate this

    Comment number 266.

    Dig for Victory !

  • rate this

    Comment number 265.

    2 things beggar belief to me (i) that America apparently wants us to stay in the EU & (ii) that some business people think it would be bad for the UK. to leave.
    (i) Whenever the USA has sought Britain's help, I can never recall them contacting Brussels rather than London & (ii) how can it be bad to conduct one's own business, make/uphold our own laws, and continue to trade with who we like?

  • rate this

    Comment number 264.

    When Cameron refers to working hours of doctors ,I assume he really means the workforce in general and in breaking away from Brussels we can go back to much higher working hours and help cut overtime bills,etc.David Cameron's policies will be in the next Christmas Panto as the Emperor's New Clothes.

  • rate this

    Comment number 263.

    There is a 'get out' mentality which has become part of the public perception and is now so strong that many have stopped listening The 'stay in' politicians need to spend the time up to the next election giving us their message if they want to win the day
    That means avoiding cheap partisan jibes from all sides
    The EU decision could be more important than who wins the next election
    Got that Ed?

  • rate this

    Comment number 262.


    'You don't sell shares when they hit rock bottom and the situation in Europe can only improve in the future.'

    That's probably what shareholders in Woolworths thought.


    'Cameron's move will hasten Scottish independence too'

    A win-win.


    'I don't want a Sun reader deciding the future of the country.'

    They voted for Blair/Brown. Ooops. Your point.

  • rate this

    Comment number 261.

    The Tories want out of the working time directive so that they can shaft the average worker even more. Lower pay, longer hours, less holidays and less rights unless you're one of the privileged few.

  • rate this

    Comment number 260.


    Dear Sir,

    Apologies for the oversight, I have clearly missed the irony.
    gave you a plus for your kind rebuke: been mixing with too many squaddies and builders over the years.

    back to topic: I'll take Cameron on EU over blair, brown or Major anytime. don't think Ted Heath saw what EU has evolved into.

    and we must support New Zealand lamb again, price of lamb is now extortionate.

  • rate this

    Comment number 259.

    218 Trout Mask Replica
    Ur just upset that I pointed out a bit of history to u.
    Imagine how much further ahead they be (& us), without the EU's red tape on top of our own domestic tape!

    Maybe we could be a continent of Singapores. We were in the industrial revolution.

    Oh, btw: Economically, there's far less red tape in Singapore than almost anywhere on Earth. Everyone knows that :D

  • rate this

    Comment number 258.

    2.3 million people from the EU working here using the NHS and getting benefits

    Most of which are actually paying taxes as well, both income and council tax. It is illegal, non EU immigrants that don't pay tax, but they also can't get benefits or non emergency NHS treatment because they're not British/EU citizens.
    Having the EU means more tax income here, not less.


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