RUTH SUNDERLAND: Let business have its say on debate over British exit from EU

John Redwood, the Eurosceptic MP, reckons business leaders should keep their noses out of the debate on Britain’s future in Europe.

On the contrary. Executives are normally very shifty about saying anything in public that could be construed as political; they prefer to wheel and deal behind the scenes. Late in the day, they found their voice over the Scottish referendum, though only under pressure from Downing Street.

Their contribution was invaluable in pointing out the likely real effects on the currency, the banking system and on jobs, as opposed to the tartan fantasy peddled by the SNP.

Brexit: A UK departure would not lead to a break-up of the union, but it would be a pretty seismic event, says Ruth Sunderland

Brexit: A UK departure would not lead to a break-up of the union, but it would be a pretty seismic event, says Ruth Sunderland

Business should play a similar role in the debate over a ‘Brexit’, or British exit, from the European Union. Far better that they do so openly than by lobbying in the shadows. Redwood’s reasons for trying to impose a vow of silence on business are tenuous at best.  

He seems to think executives ought not to say anything that might annoy their shareholders or customers, though in practice it is impossible to run a company without upsetting some of your stakeholders, at least some of the time.

It is true, as Redwood says, that business leaders have a dodgy track record when they intervene in politics. Notoriously, the car industry and much of the City argued that the UK must join the euro back in 1999 or face dire consequences, when the opposite was the case. But if being badly wrong in the past disqualifies people from expressing an opinion, then most of us would be subject to a gagging order.

Executives are prone to see the Brexit question through the prism of their own immediate self-interest: they focus on what it will mean for their widgets when the far bigger question of Britain’s place in the world is at stake. But the business interest is one important aspect of that.

The idea that, freed from the shackles of EU red tape, the UK economy would operate in an optimum way, is a utopian fantasy on a par with Alex Salmond’s notion that Scotland would be transformed into a Celtic tiger if only it were free from the odious yoke of the English tyrant.

 

What might happen would depend on the exact nature of the Brexit. Trade with Europe, which is huge, would of course continue. We would, however, move outside the EU umbrella and need to hammer out a raft of trade agreements, with no certainty over how advantageous – or not – these would be.

The fear in the City is that a Brexit could harm London’s status as a financial centre. London accounts for 78 per cent of EU foreign exchange turnover, 85 per cent of hedge fund assets, 57 per cent of private equity and 50 per cent of fund management assets, so this is no idle worry.

Credit rating agency Standard and Poor’s said last week that a Brexit is likely to affect the UK’s credit rating, and therefore our borrowing costs. Whether this is reasonable or not is beside the point: the fall in the pound ahead of the Scotland referendum showed how nervy markets are about politics.

Threats by car makers and by big US banks in the City to leave the UK in the event of a Brexit should be taken with a pinch of salt. These are made whenever anyone proposes anything they dislike,

including tax measures and bonus curbs.

A Brexit, however, might put the brakes on future investment in this country, with low-tax Ireland a tempting alternative.

Currently the UK attracts more foreign direct investment than any other EU member state, and financial services accounts for more of it than any other sector. Jeopardising that is not to be undertaken lightly.

We tend to think only about the effect a Brexit may have on us in Britain, but what of the impact on the rest of Europe?

A UK departure would not lead to a break-up of the union, but it would be a pretty seismic event.

It would encourage populist political movements in other countries and weaken the fabric of the EU, which at a time when President Putin and others are becoming more aggressive might not be ideal.

It would also upset the Americans, who want to see us advocating Anglo-Saxon capitalism from inside. Barack Obama has made clear he wants Britain to stay in.

Issues such as immigration and shocking rulings from the European Court of Human Rights are dominating the debate, which is in danger of becoming emotional and light on facts.

There needs to be a broader, more evidence-based discussion.

The nature of our relationship with the EU will have far-reaching consequences for companies and the economy. Whether one agrees or not with business leaders’ worries about a Brexit, they deserve a fair hearing.

The comments below have not been moderated.

The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

By posting your comment you agree to our house rules.

Who is this week's top commenter? Find out now