BREXIT ANALYSIS – PRESENTED BY EDELMAN
EU REFERENDUM t
23 JUNE 2016
MM OONNT HTS H S
D DAA YY SS
WEIGHING THE ARGUMENTS: TO LEAVE OR REMAIN? Prosperity or penury? The economy is at the centre of the debate on Britain’s membership of the European Union. But thus far the referendum campaign has made scant room for sober assessment. Britain is a rich, creative nation. Its economy can grow within or outside the EU. What matters is the balance of advantage for investment, employment and productivity. The weight of argument is on the side of the Remain camp. The single market, standardised regulations and norms, complex cross-border supply chains, a 40-year-old habit of doing business based on open access to continental markets, and Britain’s role as a European base for global businesses point up the advantages. So too do the dozens of EU trade deals that allow British-based companies favoured terms in third markets. The minis built by BMW in Oxford are sold around the world under arrangements negotiated by Brussels. A poll of 100 economists for the Financial Times saw more than three-quarters conclude that Brexit would indeed damage Britain’s economic prospects. Less than 10 per cent thought the country would benefit from cutting its ties with Brussels. The Bank of England, the OECD, the IMF and the G-20 have likewise added their voice to David Cameron’s warnings that a leave vote on June 23 would be hugely disruptive. The conclusion is unsurprising: the EU gives British companies open access to a market of more than 500 million people, one that also happens to be the world’s richest. It is often forgotten now, but much of the impetus for the original decision to join in 1973 came from relative economic decline. The curtain had come down on the Empire and Britain looked across the channel at France, West Germany and Italy to see economies that were outperforming its own. Between the EU’s founding in 1958 and Britain joining in 1973, gross domestic product grew by 95 per cent per head in these continental economies. The figure for Britain was 50 per cent.
Forty-three years on the roles have been reversed. Britain’s productivity has grown faster than that of its neighbours leaving Britons more prosperous than German, Italian or French citizens for the first time since the mid-1960s. Membership of the EU has transformed the economy. Above all, competition in the single market has sharpened productivity. Instead of British Leyland, Britain now boasts the most efficient car manufacturing plants in the world. There are costs to membership. Small and medium-size companies with little inclination to join continental supply chains find the regulations irksome. It does not help when they are gold-plated in Whitehall. Brussels is not always to blame. It was a British Government that wanted an EU-wide regulation setting a limit on the noise emissions of lawn mowers. The Leave campaign argues that outside the EU Britain would be free to set the terms of its trading relationship with the rest of the world. Even putting aside the inevitable and damaging disruption as the Government sought to negotiate dozens of bilateral trade and investment deals, there are problems with this argument. One is that the Government would need to hold on to the present EU standards, norms and regulatory framework. Nations such as the US, Canada, China and India would be unwilling to trade on the basis of a new set of specifically British rules. Another that the Brexiteers are divided about is the terms of a continuing relationship with the EU. Would Britain be Norway? Or Switzerland? Or Japan? Boris Johnson has advocated a Canadian model, but that would lock out the City from Europe’s financial services. Likewise an attempt to copy Singapore or the Republic of Korea. Until it can explain what Brexit would look like the Leave campaign will be hard-pressed to show Britain would be more prosperous outside. There may be reasons why some Britons want to leave the EU, but higher living standards should not be among them.
Philip Stephens Associate Editor, Financial Times Philip Stephens is a commentator and author. He is associate editor of the Financial Times where as chief political commentator he writes twice-weekly columns on global and British affairs. He joined the Financial Times in 1983 after working as a correspondent for Reuters in Brussels and has been the FT’s Economics Editor, Political Editor and Editor of the UK edition.
THE DEBATE: ARGUMENTS FOR REMAINING AND LEAVING, ACCORDING TO THE MAIN CAMPAIGNING ORGANISATIONS
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK
BRITAIN AND EUROPE The Facts & Figures
REFERENDUM VOTE INTENTION POLL OF POLLS 57.5%
Remain ––––––– LEAVE –––––––
55.0% 52.5% 50.0% 47.5% 45.0% 42.5% 04/01
11/01
18/01
25/01
01/02
08/02
15/02
22/02
29/02
07/03
14/03
WHO’S SAYING WHAT The Key Players
SIR MICHAEL RAKE
JOE FOSTER
ANATOLE KALETSKY
JOHN CAUDWELL
JOHN MCFARLANE
IAN TAIT
David Cameron
TARIQ USMANI
David Cameron
ANATOLE KALETSKY
JOE FOSTER
It means pressure on the pound sterling. It means jobs being lost. It means mortgage rates might rise. It means businesses closing. It means hardworking people losing their livelihoods.
To exclude ourselves from the single market would be the closest thing to economic suicide.
We have sent billions to the EU each year and got little in return. That’s why many business leaders have now decided to back the campaign to leave the European Union, I hope you will join us too.
Prime Minister
JOHN MCFARLANE
Chairman of Barclays Bank Foreign organisations use London as their main access to Europe, and we don’t know what the impact of withdrawal will be.
Economist and journalist
SIR MICHAEL RAKE
Chairman of BT Group and WorldPay We have had net significant investment in this country during this period of uncertainty because people are convinced common sense will prevail and we’ll stay […] but there has already been some loss of investment, not huge, and there will be more if we start to get into a position where it looks serious that we might leave.
Founder of Reebok
JOHN CAUDWELL
Founder of Phones4U If you are running a business in the UK, why would you ever want a holding company there that you pay money into and that makes decisions not in your best interest?
IAN TAIT
Head of the private investment office at London & Capital I don’t think there would be an immediate impact to business.
TARIQ USMANI
Chief Executive of Henley Homes As long as Britain’s trade policy is controlled by the EU, we cannot sign bilateral free trade agreements with Pakistan, India, Bangladesh, Australia, New Zealand or for that matter any other non-EU state.
HOW EDELMAN CAN HELP YOU If you are still considering your position on the EU referendum and would like some guidance with your messaging, Edelman’s Public Affairs team would be delighted to help you. Please contact Gurpreet Brar on gurpreet.brar@edelman.com and 020 3047 2466.