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 297.

    Good to have a debate, if about democratic deficit
    But a referendum?

    We are promoted! From dumbed-down, barely employable, or un-employable, to capable of "balanced debate based on fact not fiction", even though 'informed' by an elite - government, media & business-class - regularly exposed as 'not fit for purpose'

    Real democracy, equal partnership, not on the syllabus, let alone the voting card

  • rate this

    Comment number 296.

    stranglehold of bureaucratic red tape.
    I was discussing this only the other day

    With an 8 year old chimney sweep whose brother had died aged 9 he fell down a chimney

    His father had died at work when his boss told him to cut corners or he would be sacked

    His mother who and youve guessed it, died when she tripped over some of that red tape you keep banging on about

  • rate this

    Comment number 295.

    When we leave (& we will), life will carry on pretty much as normal - re business we'll lose some & gain some, & wonder what all the fuss was about.
    The world will not end, just as it didn't end when we failed to join the Euro (& notice how many of the same voces predicting disaster then are now predicting it again). Meantime, get set for a barrage of frighteners from the usual suspects.

  • rate this

    Comment number 294.

    Frankly you don't know what red tape unless you try to do business in the US.

  • rate this

    Comment number 293.

    Some business will thrive, others will suffer....

    One thing is for certain, if we're not in in, then there'll be a lot less restrictive & pointless regulation...

  • Comment number 292.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 291.

    do not want UK laws being made by some unelected politician in Brussels"

    But this will happen anyway and outside the EU we cannot influence them.

    "I want laws on criminal justice"

    Fair enough

    "environment..made by UK Parliament"

    Except the UK has been a leader in getting common EU action in that area and if we realxed environmental standards we would be subject to trade barriers.

  • rate this

    Comment number 290.

    The working time thing is a dumb scapegoat for Pro-EU campaigners.
    Thinking we will be taken back to victorian time working hours etc is just rubbish.
    Labour would campaign against it. It is on things like this that Labour would win back it's core voters. But instead of just blaming the EU, they would have to fight for working men on the frontline of politics
    ....if they truly are labour!

  • rate this

    Comment number 289.

    7 Minutes ago

    So are we suggesting UK government policy should be influenced by a US bond market investor?


    Why change the habit of a lifetime?

  • rate this

    Comment number 288.

    The promises, the discussions, the scaremongering and all these comments are worthless.
    Until negotiations on the terms of our membership of the EU are completed and resolved, no-one can make an informed argument, let alone decision.
    In or Out? I don’t know yet and won’t pre judge the outcomes of negotiations.

  • rate this

    Comment number 287.

    The right wing of the Tory Party (including UKIP) want the UK to leave Europe so that the UK can dump all the current protection of social and legal legislation. Thereafter they can then get all working people in the UK to toil like a Navvy, at all hours of the day and night and for peanuts. All so that they can line their pockets still further while we become even poorer still.

  • rate this

    Comment number 286.

    Wow, the cost of a mobile phone call has gone down 70% and a plane ticket 40%, or thats what they believe (the EU).

    If this isnt enough reason to stay in the EU i dont know what is....

    Shame i cont afford a holiday to fly to or phone home from the main land... maybe its becuse our borders are being overrun by those who love Europe enough to come over here and consume our jobs and benefits.

  • rate this

    Comment number 285.

    #250. Steve Richards
    "I worry that my children and grand children will not be able to find work in the UK with a constant inflow of workers from EU countries,"
    So taking a leaf out other EU members book and seeking work within the EU is not an option?

  • rate this

    Comment number 284.

    If the UK stays in the EU, working hours will go up, wages will go down

    If the UK leaves the EU, working hours will go up and wages will go down and there will be a trade war - things made in the EU will cost more in the UK and the UK will not be able to sell as much to the EU.

    Why should the economic future of the UK be put to a vote? This is political grandstanding in its most obscene form

  • rate this

    Comment number 283.

    The way forward is to educate people and allow them to make an informed decision themselves. Provide them with the facts on leaving EU or staying in the EU. Make sure they know that it is the EU they are proposing to leave not the EEC.

    Too many people both in the press and regular workers are not actually aware of all the information. I hope Ed retracts his statement and also considers reform.

  • rate this

    Comment number 282.

    So much has chaged since it all started even the idea of it, which we never had a say. Many of the problems are to do with our lawyers/solicitors not EU but they are protected by all parties. We need to be given the truth not lies. Immigration is not being dealt with, there should not be appeals lasting yrs [again lawyers greed] no Amnesty how ever long they have been here. No more building houses

  • rate this

    Comment number 281.

    Whatever the rights and wrongs of the EU and our membership, it surely cannot be wrong to put the issue to a vote. You can be cynical about what people might say, but to deny them a vote is simply an arrogant rejection of democratic principle. There are countries in the EU that think we can't afford to indulge in such democratic luxuries. They are wrong.

  • rate this

    Comment number 280.

    All Dave cares about is winning the next election

  • rate this

    Comment number 279.

    Do we really want to move to working more than 48 hours per week, with no minimum wage, no automatic holiday entitlement? If so then vote No. The EU legislation helps the ordinary working man, that's why these companies are against it. That's irrespective of whether the EU will allow it. I'm off to Scotland!

  • rate this

    Comment number 278.

    Its undemocratic to avoid a referendum for fear of the result.

    What the govt should be doing is making sure that the general public are well informed on this issue. That way when we do make a decision we will know and accept the consequences either way.


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