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 337.

    I'm french, leaving in Bordeaux. US Investment goes to the UK as it is simple, they feel confident having no language barrier and close culture. With the UK out of the Union they will consider other EU countries.
    The reason why I like the EU idea has nothing to do with money unlike The British people who only see the business perspective and their own interest. The EU has brought piece to us all.

  • rate this

    Comment number 336.

    Much as a referendum is needed and democratically desireable, I do fear it will be at the time used for for short term tactics at that time, for example as a 'vote of confidence on the current government's policies' .
    Those who rightly ask for serious debate and consideration may be well-meaning but naive.

  • rate this

    Comment number 335.

    Our democratic model aswell as those across the EU is spent, people should take a long hard look at our representation or lack of in the UK.
    The model is warped so far from its original concept that we should seriously consider overhauling/overthrowing the state that governs us.
    I am sick of the incompetance of our leaders and their complicity with corporate entities.
    Lets lead the way?

  • rate this

    Comment number 334.


    "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"

    The minimum wage was nothing to do with the EU and if anything, the availability of some cheap eu immigrant labour has undermined it .

  • rate this

    Comment number 333.

    What a dithering mess we are now in ? Far too much is devoted to this EU debate when there are many more important issues affecting the country and its economy. Of course this is Cameron's attempt to appease the anti European lobby in his own party and the price is total uncertainty for years . Any comparisons between the UK and other countries are totally meaningless.

  • rate this

    Comment number 332.

    Stuff what Pimco & what the global elite in Davos think this is about the British people taking control of our own destiny and not having our detiny dictating to by the global elite moneyshifters. We are a small business nation as Napoleon said.This is big bsuiness's mess and we can think for ourselves thankyou.

  • rate this

    Comment number 331.

    Imagine how much further ahead they be (& us), without the EU's red tape on top of our own domestic tape!"

    Unlikely as Germany, Finland and many other EU states benefited from a common set of rules that provided economies of scale to reduce cost and provide unfettered access to a market of 600 million consumers. Whilst they are receptive to reform, it's not at the cost of the EU itself.

  • rate this

    Comment number 330.

    Pandoras Box springs to mind..... Whatever the outcome of this is it will be bad for Britain.

    Consider one thing, is this being done for the people of Britain or the business interests of Britain? Vote on how it will really influence you not as some collective two fingers at the EU because you can.

    What's good for business isn't always good for the people.

  • rate this

    Comment number 329.

    #297.All for All
    May I ask but have you changed your Have Your Say forum name per chance?

    The way you lyrically write seems awfully familiar to me.

  • rate this

    Comment number 328.

    The cost of being in the EU is extremely high yes, but do any of you know how much the cost will be to stay in the Single Market out of the EU. Ask Norway, it costs them a fortune and yet the prices of food and cars etc are so much higher than they are here. You're also not allowed to bring in certain things from the EU without paying a huge tax. They are a rich Oil producing country, we're not.

  • rate this

    Comment number 327.

    Time for the EU model to change. Germany is suggesting a more unified (political) approach whilst the UK wants to strengthen a free common market. Germany's solution smells of a European nationalistic takeover by Germany's politics as oppose to continue to enshrine sovereign rights of nations. I prefer the UK's model. PS - the US should mind its own business.

  • rate this

    Comment number 326.

    300. englishvote
    "Strange that the BBC very rarely mentions Switzerland when talking about the EU"

    You're wrong. They mention it with a very good analysis:
    Sceptical Swiss locked into EU's embrace.

    Certainly a more down-to-earth analysis than many posteres

  • rate this

    Comment number 325.

    When the sheep have all voted to leave the EU, I want a new British law that allows me to identify myself as an EU citizen (perhaps by pinning a yellow star on my lapel, or whatever, I don't mind). Then, I can waltz across the Channel without showing my passport, bring back as much wine as I like without customs duty, while the other lot queue at the passport and customs booths...

  • rate this

    Comment number 324.

    "minority parties who seek an exit will be demonised, denounced as waycist and extreme far right, and may even have their meetings broken up by the usual rent-a-crowd. So can we discuss something relevant."

    And you're OK with that? That wouldn't be newsworthy? I've seen this kind of action firsthand, it's disgusting and is worthy of Nazi Germany or Communist Russia/China

  • rate this

    Comment number 323.

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

    I said this yesterday and wholeheartedly believe it. You do not see EU debates without the typical cliched arguments of "immigrants stealing British jobs". It's like the NI border poll thing, if balanced debate is impossible, it is not the right time for a referendum.

  • rate this

    Comment number 322.

    Lots of scaremongering going on re leaving the EU. None of it justified. Mostly centered around the "who will do business with us if we leave the EU"

    Answer: The EU. It's in their own rules. Try reading them.

    Conclusion: Get me the hell out of europe.

  • rate this

    Comment number 321.

    Once again CallMeDave is too frightened to be upfront and to announce any real policies. This is the biggest non-news story of the year. This is a classic old Tory con trick. "Vote for us in the next election, and we will give you this as a reward...maybe...perhaps...we think..." He is fooling no-one.

  • rate this

    Comment number 320.

    Oh dear, #35, Finland is, as you say, doing ok, though still subject to the current recession. It is, however, in the EU, Schengen agreement, euro currency and all the rest. All the better for it, too. I've seen that change for the better in the almost 30 years I have lived there. Not all would agree, but that's the way I see it. The Finnish media does a good job of informing and educating.

  • rate this

    Comment number 319.

    We are not leaving the EU whatever happens. The major parties and BBC are in favour of staying in, Obama has told Cameron to stay in. During the next couple of years minority parties who seek an exit will be demonised, denounced as waycist and extreme far right, and may even have their meetings broken up by the usual rent-a-crowd. So can we discuss something relevant.

  • rate this

    Comment number 318.

    95. Waterproof. You speak of "lack of understanding". Is it any wonder that the British public want a vote. Try and compare the campaign literature and ballot paper in the 1975 referendum with the actual words of the Treaty of Rome 1957. The British public where duped into a yes vote. Information is controlled by powerful institutions like the BBC and Government.


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