Permalink to CBI strongly in favour of UK remaining EU member
Andy Jalil –
Foreign Correspondent –Despite a growing number of businesses in Britain backing the campaign for the country to leave the European Union, the Confederation of British Industry (CBI) continues its support to remain. It warns that leaving the EU would cause a serious shock to the UK economy. That comes from them after an independent study carried out by major accountancy firm PwC found that by 2020, the cost of Britain’s exit (Brexit), to the country’s GDP could be as much as £100 billion with nearly one million jobs lost.
That would prove to be a real blow to living standards with household incomes across the UK could be up to £3,700 lower than were the country to stay in. The Leave campaign, not surprisingly, dismisses this in spite of the economic case stacking up against them, according to CBI, which claim that the Leave supporters have consistently failed to come up with a credible alternative to full EU membership.
Before the end of March there were two further studies, from Oxford Economics and the London School of Economics, which show that a vote to leave is a vote for a less prosperous UK. While the business and economic case is only one part of the story for the voting public, it is an important one.
For the study that the CBI commissioned, PwC looked at two possible exit scenarios and their impact. One was a “plain-sailing” option where a free trade deal is quickly agreed with the EU and the UK maintains all of its trade deals with rest of the world. This would amount to being overly optimistic, and even then there would be great uncertainty for business, with investment down and GDP as much as 3 per cent lower by 2020.
The other scenario, according to the same study, sees the UK drop into World Trade Organisation rules, which would see the return of tariff barriers for business but the UK signing new trade deals. The economy would slowly recover over time, but in either case the economy never quite tracks back to where it would have been if Britain had stayed in. Of course, Britain would survive outside the EU and, in time, the economy would grow again, but leaving the EU would mean a smaller economy than choosing to stay.
The CBI says that the EU is not perfect and poorly thought-out regulations are a headache for businesses. But some of the savings that are often cited by the Leave camp are illusory. The benefits of being part of the EU mean Britain goes “toe-to-toe” with other economic giants around the world in trade negotiations.
By leaving, it would most likely drop out of the EU trade deals it currently benefits from and have to renegotiate them from scratch. The UK could end up at the back of the queue, with many countries preferring to negotiate comprehensive deals with larger regional blocs, according to CBI.
That’s just one reason why, in a recent independent poll of CBI members by ComRes, 80 per cent of CBI businesses wish to remain in the EU with just 5 per cent wanting to leave. That’s small, medium and large firms, which operate in every part of the UK and across every business sector — together they employ nearly 7 million people. Recent business surveys have covered smaller and mid-sized firms, as much as large, and they demonstrate majority support for remaining within the EU — that is the mainstream business view.
The challenge for those pushing to leave is to make the economic case for how the UK would be better off outside the EU.
CBI says when presented with solid economic analysis from numerous respected bodies, the Leave camp choose to cherry-pick, ignore the facts or claim scare-mongering. The public deserves to hear sober economic analysis from both sides of the argument.