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 317.

    "John Shropshire
    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."

    Why does it "beggar belief"? Aren't these entitled to an opinion you don't agree with? Might it be possible they base these opinions on facts and information you are unaware of or choose to ignore?

  • rate this

    Comment number 316.

    @261.Rate this comment negatively

    enlightenment me:

    1. average worker: average being mean, median or mode? tube drivers? 70s shop steward? builders?

    2. Lower pay: trust me, I'll take it, and lots on the queue

    3. longer hours: been on it for years

    4. less holidays: haven't had one for years

    5. less rights: annual redundancies for years

    6. privileged few: like Labour and communist countries?

  • rate this

    Comment number 315.

    The UK has a net trade deficit with Europe; EG the UK is Germany’s biggest export customer. I million more Eurozone jobs depend on trade with the UK (4M) than UK jobs depend on trade with the Eurozone (3M). The UK is one of the largest contributors to the EU budget. The UK is more important to the EU than the EU is to the UK; we can renegotiate from a position of strength.

  • rate this

    Comment number 314.


    Just now

    "279.Fragile Planet
    Do we really want to move to working more than 48 hours per week, with no minimum wage, no automatic holiday entitlement?"

    You genuinely believe that employee rights and laws relating to them are dependent on EU membership?
    The EU is protecting British workers from the neanderthal world of profit hungry free marketeers.

  • rate this

    Comment number 313.

    I bet heads of multi-nationals are already planning to leave the UK and move to France. I'm sure they can't wait to move and pay 70% tax on their pay & share options.

    Somehow, I don't think Laurent Fabius red carpet will get much wear though. Still, he can always expense it to the EU.

  • rate this

    Comment number 312.

    There's 70million people in this country, surely the whole point of a democracy is that we all get a say. Whether people want to be in the EU or not, we should get to choose.

  • rate this

    Comment number 311.

    It's no wonder they're divided.

    While i'm sure being part of the EU helps some businesses its not going to help them all. Indeed, my own business was damaged badly by the EU trading off policies to broker one of their deals. When we tried to get help through our MEP we were told sorry there's nothing we can do.

  • rate this

    Comment number 310.

    The British Public are perfectly competent to make an informed choice in an EU referendum.
    Arrogant politicians of all flavours who are there to implement OUR will, have little regard for their electorate.
    Cameron has had the balls to make a clever gamble that will ensure some serious and badly needed reform. Other countries will follow.
    The reformed EU will continue in greater prosperity.

  • rate this

    Comment number 309.

    @131 John Petrie
    ''anyone else surprised by how unprepared miliband was''

    Absolutely John... it's what shocked me most yesterday and in the days leading up to the speech... just how unprepared the Labour/EU response was! Choosing the ''see-how-divided-the-tories-are-on-EU'' tactic. Labour now appear idealogically naked, undemocratic and open to ''nanny-knows-best''... Miliband will pay for this.

  • rate this

    Comment number 308.

    Finding a platform to have a balanced debate in this is going to be near impossible in my opinion.

    The BBC show their true colours on a weekly basis through Question Time, and everyone else will be so open to powerful political influence, I can't see us getting an informed balanced discussion. People with the power to make this happen will have their own agendas, money/titles/peerages talk.

  • rate this

    Comment number 307.

    @265 we will be able to trade with who we like if we leave just as we are on the inside of the eu. but what you fail to mention (and with the top two comment's shown in the editors pick along with yours it clearly shows the editor is biased, and what side of the fence he sits on) is that we will have to pay to trade with europe with import/export taxes. that will make trading more expensive.

  • rate this

    Comment number 306.

    Agree with your comment ,

    Also has everyone forgot how much it costs Britain's membership to the E U, i can rember first vote 50 years ago, everyone i spoke to voted no as did I

  • rate this

    Comment number 305.

    The dominant philosophy has always been French, statist, protectionist & agricultural.

    I'm sure Germany would like a more outward looking approach as would Holland & the Scandanavian countries (net contributors)

    But France will not let go easy nor will the gravy train bureaucrats or the majority net recipients countries

    Trying to make changes on the inside has failed completely


  • rate this

    Comment number 304.


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

    Because British Welsh hill lamb is rubbish?

    "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.

    Thatcher signed the Single European Act in 1987, not Blair, not Brown
    and not Major.

  • rate this

    Comment number 303.

    At the end of the day its down to everyone in the UK. We have to weigh up the pros and cons of either staying in or leaving the EU. No politician, business leader, journalist or media outlet can decide for us. They can tell us what may happen if we do or dont stay in. This should have been decided a long time ago but the politicians didnt trust us. Hopefully this will once and for all settle this.

  • rate this

    Comment number 302.

    Excellent Davos speech, PM !

  • rate this

    Comment number 301.

    "279.Fragile Planet
    Do we really want to move to working more than 48 hours per week, with no minimum wage, no automatic holiday entitlement?"

    You genuinely believe that employee rights and laws relating to them are dependent on EU membership?

    How do our Europhilic friends reconcile that with their regular claim that we have self-determination and aren't governed by the EU?

  • rate this

    Comment number 300.

    If you want to know what it is like to be successful in Europe and yet not be part of the EU then just look at Switzerland.

    Surely people could tolerate a standard of living equivalent to Switzerland if Britain choose to leave the EU?

    Strange that the BBC very rarely mentions Switzerland when talking about the EU

  • rate this

    Comment number 299.

    277 Trout Mask Replica

    Trout! Are you Obama?
    You must be, judging by your global government agenda :)
    Let me quote you, ahem, I mean Obama:
    "You didn't build that, someone else made that happen":

  • rate this

    Comment number 298.

    288.David White - "......Until negotiations on the terms of our membership of the EU are completed....."

    There's not going to be any negotiations on the areas outlined by Slasher Cameron - and he knows is all for show to try & kid the rabid right of his party not to vote UKIP......


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