Business uncertainty over EU on the rise as voters head to Euro-polls
As voters across Britain and Europe prepare to go to the polls this week, the British Chambers of Commerce’s latest EU Business Barometer shows a substantial increase in uncertainty among UK businesses over the future of the UK’s relationship with the European Union.
When asked how a number of possible scenarios could impact the prospects for their company, increasing numbers of businesses responded ‘don’t know’, raising questions about the quality of public debate currently underway in the UK around this crucial issue.
While re-negotiation of Britain’s membership and remaining within the EU remains the most positively-viewed scenario, business enthusiasm for it has declined significantly. What’s more, nearly twice as many businesses are uncertain about this option as they were just one year ago. These findings raise important questions around the progress of the Prime Minister’s preferred EU strategy.
Key findings from the BCC’s Q1 2014 EU Business Barometer:
The scenario which produced the greatest increase in uncertainty was Britain retaining membership of the EU and transferring specific powers back from Brussels.
• The proportion of businesses who ‘don’t know’ how this could impact on the UK has increased from 10.7% in Q1 2013, to 19% in Q1 2014: an increase of almost 80%. • More than half of businesses said this scenario would be positive for the UK (54%), although this figure has decreased consistently over the last 12 months (64% in Q1 2013; 61% in Q2 2013; 57% in Q3 2013; and 56% in Q4 2013).
Businesses say a full withdrawal from the European Union would have a negative impact.
• 61% of firms said that a scenario resulting in Britain’s withdrawal from the European Union would have a negative impact on their future prospects. Only 12% of firms view this scenario as a positive, the lowest number on record.
• The number of businesses who responded ‘don’t know’ to this scenario increased to 16%, compared with 12% in Q1 2013
Further findings from a related BCC survey, reported in the Barometer, reveal:
Businesses favour a pragmatic, rather than ideological, approach to the UK’s relationship with Europe.
• 59% of businesses polled favoured remaining outside of the Eurozone – versus 14% who favour joining and 27% who don’t know • 56% favour remaining a member of the EU – with 16% favouring an exit and 29% unsure
However, there is strong evidence of a pragmatic approach from those polled. When asked what would constitute a reason for the UK to leave the EU:
• A quarter (24%) said a drop in the economic performance of the EU economy
• And almost half of companies polled – 48% — said that increased political integration would be a reason for Britain to leave the EU
Commenting, John Longworth, BCC Director General, said: “In the space of a year, business opinion on a renegotiated relationship with Europe has started to cool, and more UK firms are gradually stating they ‘don’t know’ how this would impact on their future prospects.
“Although we can’t be certain, there are a number of possible explanations. The on-going recovery, coupled with less frantic media headlines around the state of the eurozone over the last twelve months, could mean that businesses are less concerned about the UK’s relationship with the EU compared with a year ago. We also know from our own data that businesses have become less reliant on trading with the EU, and are increasingly exporting to countries outside the eurozone.
“As voters head to the polls for Euro-elections here in the UK and across Europe, the increase in businesses who say they don’t know how these potential scenarios will affect the UK’s future should be a wake-up call for Britain’s political elites. Our findings suggest that the Prime Minister may soon need to shore up flagging business support for his ‘renegotiation and referendum’ strategy. Arch Eurosceptics and Europhiles in all parties, meanwhile, need to recognise that businesses are pragmatic about the EU, not ideological – and that debate over Britain’s future place in Europe must be rooted in hard evidence and good information.”