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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  • Comment number 577.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 576.

    We should be an active member of the European family and positively engage with Europe. This does not mean we have to surrender soverignty or control. We should even adopt the Euro when the time is right for the sake of British businesses, how we maintain control then is a matter for discussion and will need to be carefully thought through.

  • rate this

    Comment number 575.

    If Mr Cameron wants to improve our liveliehoods there are easier options available now.

    For a start he could barr all internet gambling sites from operating in the UK. It would take about 5 minutes of parliamentary time and could be effective almost immediately. Lives would improve almost immediately.

  • rate this

    Comment number 574.

    "How on earth does a 49 seat majority equal a "landslide victory" similar to Labours 167 seat majority in 2001?"

    The commenter was talking about raw numbers of votes, not the number of seats that those votes pertain to in our antiquated and rather lopsided psuedo-democratic dictatorship.

  • rate this

    Comment number 573.

    "The lack of understanding of the EU ...if there is to be a referendum, there needs to be a balanced debate based on fact not fiction."

    If that was the case this incompetent Govt would not be in Office now - their whole strategy is based on story telling, scaremongering, end of reasoning, and ruling by fear. Take a look at the triumphalism headlines in Daily Fail & Torygraph.

  • rate this

    Comment number 572.


    How on earth does a 49 seat majority equal a "landslide victory" similar to Labours 167 seat majority in 2001?


    I don't think you realize that Britain is small fry compared to the rest of Europe as a collective. We are minnows in a shark infested sea.

  • rate this

    Comment number 571.

    EU always was a club for big business, with crumbs 4 workers. Now the most right wing:cameron-Torys dont even want us 2 have the crumbs. I forsee years of industrial action-s, growing "undeclass" , and market insecurity-indecisiveness; all unwelcome

  • rate this

    Comment number 570.

    515.Grace "Why should we trust the Germans and French can govern our country better than our own government?"

    I weep at the thought that the future of this nation could be decided in a referendum by this kind of thinking.

  • rate this

    Comment number 569.

    Cameron's pragmatic, grown-up approach to EU membership is the right approach for this country. If upsetting the ego's of the Federalist leaders in the EU is a reason for not looking after the UK's interests it is a very bad reason despite what the last government thought. If the EU leaders do not listen to Cameron and take on board the UK's issues I think I shall be voting for out.

  • rate this

    Comment number 568.


    "If he is serious about it he could have the ref now, but he knows he won't be in by 2017 as he only scaped in with th Lib/Dems help after 13yrs in opposition."

    No he can't have a ref now. The libdems would stop him.
    He won more votes in 2010 than labour in 2005 and similar to labour in 2001 when they had a landslide 167 seat majority.

  • rate this

    Comment number 567.

    It is questioned whether other EU members would permit us to revert to a free trade arrangement like Norway and Switzerland. We are still the world's 6th biggest economy and major trading partners with EU countries. Whatever posturing they adopt now, they're not going to cut off their noses to spite their faces.

  • rate this

    Comment number 566.


    "If The EU implodes so will the UK economy. Without the EU our economy would collapse"

    Your first sentence is correct, despite what Labour say ( "the UK economy's performance is all the Coalition's fault"! ).

    However, your second sentence is typical pro-EU scaremongering!

    Why would Germany stop exporting to UK or stop importing UK goods?
    Don't they trade with non-EU countries?

  • rate this

    Comment number 565.

    I have an idea that if we decided to leave, but wanted to continue to have access to the European free market, we might have to pay a premium or higher tariff on our trade. Its a bit like wanting the platinum membership benefits of a club when you are just a standard member

  • rate this

    Comment number 564.

    Britain in Europe = Good for business and peace
    Britain out of Europe = Bad for business and a slow decline to 3rd world status
    It really is that simple.
    Most major companies deal in Euro's or Dollars. The pound is a spent force but no one will admit it openly

  • rate this

    Comment number 563.

    The mistake is not that Cameron is proposing a referendum but that he is proposing it now.

    By all means let the people decide whether we are better off in or out of the EU but this announcement will adversely affect investment decisions for 2 years.

    Cameron should have made the announcement just before the next election but he is terrified of UKIP and his backbenchers.

  • rate this

    Comment number 562.

    I am afraid that Camerson's speech has shown in high relief his weakness as he has defined himself by the extremes of his party. But let's face it - the Tories are so unpoluar with their cuts, their handling of the economy (far from great) that they are unlikely to be in power after 2015. So the argument is academic.

  • rate this

    Comment number 561.

    He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would suffice.
    (Uncle Albert)

    An unjust peace is better than a just war.
    (An old Roman chap)

  • rate this

    Comment number 560.

    I was shocked to see a Tory politician on the BBC this morning moaning about the EU limiting Doctor's working hours.

    I would rather be treated by a well rested Doctor than someone half awake and stressed to pieces thank you. (But then I can't afford private medical care)

  • rate this

    Comment number 559.

    This referendum offer by Cameron is just a carrot to wave at UKIP voters and back benchers.

    If he is serious about it he could have the ref now, but he knows he won't be in by 2017 as he only scaped in with th Lib/Dems help after 13yrs in opposition. After such time there is usually a landslide but plenty of us remember the Tories and didn't want them back.1st time voters know the score now.

  • rate this

    Comment number 558.

    Foreign Investment into the UK is not based upon our relationship with the EU, but upon matters like the levels of Government support (grants, subsidies), taxation, availability of skilled labour, labour costs etc....

    We should remain firmly within the EU, but the more we retain our independence from the United Federation of Euro States, the better IMHO.


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