Should we stay, or should we go now?
Stuart Miller, CEO & Co-founder of ByBox, considers what the consequences of a potential EU exit by the UK could be. One of the hot topics being discussed in the news agenda at the moment is that of a potential EU exit. Closing up Britain’s borders could have a huge impact on businesses, and the referendum could be as soon as 2016. A recent report from the Chamber of Commerce finds that 40 per cent of executives think an exit from the EU would have a negative impact on business, meaning British companies are split on a decision that may, or may not, largely impact our economy. So should we stick to what we know? Or make a break for it and forge new relationships?
At first glance, one single European market might seem like a godsend, enabling British businesses to, in theory, reach out to one huge market very quickly, following one set of rules for exporting rather than 28 national ones. However, the reality rarely matches the expectations, as it is in fact a very fragmented system with a lot of static trade. This is frustrating for entrepreneurs, who can be an impatient bunch. With employment laws and local tax regimens in place, businesses can find themselves wasting energy and productivity jumping localised hurdles.
Logic would dictate that as one big EU family, establishing a business in Paris should be just as easy as setting one up in Padstow. Unfortunately, this is not the case, and you only have to look at the treatment of Uber to see this. Earlier this year, Uber’s CEO of France and Western Europe’s general manager were arrested in Paris and both were charged with running an illegal taxi business. Here in the UK this seems shocking, but the news came shortly after violent anti-Uber protests across France. As a business, Uber operates in the same way throughout Europe, so why do France’s laws deem its technology-led operations to be illegal, unlike the rest of the EU? This is a prime example of how fragmented the EU really can be.
In 2013, Britain was the second biggest financial contributor to the EU, contributing some €10.76bn, meaning our departure would provide us with immediate financial benefit.
However, in 2014 a report by the London School of Economics Performance suggested that the trade costs of leaving the EU would range from 2.2 to 9.5 per cent of gross domestic profit, likewise a report by Open Europe speculated that Britain faced losing up to £55bn a year in the worst case scenario by 2030 if an EU exit occurred. Although there may be initial benefits to leaving, we need to ask ourselves if these will be worth it in the long run. I believe they will not. Even though the EU is far from streamlined, it is still easier to trade within it, than if we were on the outside looking in.
In truth, a Brexit is unrealistic. Leaving the EU will not only make trading more difficult within European countries, but could make British industries less desirable to the US and other global markets. Much of the foreign investment coming into the country is because of our access to the wider EU market. Ivo Daalder, a former US ambassador to Nato and now president of the Chicago Council on Global Affairs, commented that, “The idea [that the UK] could have influence in the world outside the EU is risible. Its power and effectiveness is from being a strong leader in Europe.” This demonstrates how international markets value Britain’s position within with EU. We offer a gateway into the European markets for our foreign investors, without this we may have less to offer.
Business for Britain is an independent council that exists to “give a voice to Britain’s business community who want to see fundamental changes made to the terms of our EU membership.” Although they don’t campaign for, or against, staying in the EU the organisation has said, “Instead of pushing our debate to extreme corners of ‘In’ versus ‘Out’, we should be having a sensible discussion about what is wrong in our current arrangements.” This I feel is a very sensible argument and something to be considered.
Rather than eradicating the problems all together and leaving the EU, in turn removing the benefits we currently see, why not try and fix the EU? By addressing the fundamental issues and inconsistencies of the EU as it stands, we can build a stronger community in which businesses and countries actually see the benefit.
The EU ship is not sinking, so let’s not throw our assets over-board, but instead work together to set it back on course.
Stuart Miller, CEO & Co-founder, ByBox
