CBI Report: British Industry wants UK to stay in EU

The United Kingdom’s foremost industry association has called for continued EU membership and deeper political engagement by the UK. The PDU reports. By Martin McKane.

The Confederation of British Industry, the UK’s largest business association, has issued a report asserting that EU membership is fundamental to Britain’s economic future. It reveals that businesses of all sizes back British membership of the EU by a margin of 78% to 10%. It estimates that 4-5% of British GDP can be attributed to EU membership and calls for pro-business reforms to boost the EU and British economies even further. The CBI’s intervention is unlikely to sway Britons who have a more visceral opposition to the European project, but it has gained significant media traction and may influence some policy-makers.

Centre Point Building in London, home of CBI's head office.

Centre Point Building in London, home to CBI’s head office.

Leading figures in the CBI have been critical of the Conservative Party’s position vis-à-vis the EU, warning that it is stoking opposition to Europe and jeopardizing the UK’s continued membership. The report criticises the current UK government, and perhaps its predecessor as well. It charges that Britain is inadequately representing its position in EU policy-making and that it has consistently failed to maximise its influence.

The CBI report, “Our Global Future: The Business Vision for a Reformed EU”, trenchantly defends common EU regulation as a precondition for an effective single market. The purpose of these regulations is to reduce the barriers to intra-EU trade; thus, they are the basis for the great expansion of trade generated by the single market. The benefits, though difficult to quantify, considerably outweigh the direct cost of regulations, many of which would exist anyway in a self-contained UK. Since the UK is one of the world’s most liberal economies, it is a challenge to claim that EU regulation is suffocating British business.

Several myths propagated by eurosceptics are isolated and dissolved. The EU’s Working Time Directive, which sets a basic standard of workers’ rights, is a particular bugbear of British eurosceptics. Although the CBI dislikes certain aspects of the Directive and wishes to preserve the UK’s opt-out over the maximum working week, it explains that claims about the cost of the Directive are grossly exaggerated. For example, the Directive requires that EU workers are offered paid annual leave of at least 20 days. Critics charge that the EU is responsible for the cost of those 20 days. However, the UK offers British workers 28 days’ annual leave. When national standards exceed the EU’s minimum requirement, the EU can hardly be accused of stifling local business. Attacks of this nature on the EU and workers’ rights are disingenuous.

The CBI also tackles the myth that Brussels generates most of Britain’s laws. The UK Parliament itself has found that just 6.8% of UK Statutes and 14.1% of Statutory Instruments passed between 1997 and 2009 had a role in implementing EU obligations. Of course, the UK itself approved almost every one of these measures at EU level. These laws are not imposed by an alien power; they are the embodiment of the British government’s own decisions.

The report calls for greater subsidiarity and a moratorium on new EU regulations in social and employment policy. Nevertheless, it opposes Prime Minister David Cameron’s attempt to repatriate powers in these areas, arguing that such coordination is part of the necessary framework of a single European market. The organisation is also critical of British attempts to negotiate a special status within the EU, calling for reform of the EU as a whole instead.

Prime Minister Cameron speaking at a CBI event in 2010

Prime Minister Cameron speaking at a CBI event in 2010

The CBI argues that the UK government has failed to adapt to the EU’s evolution over the last five years. Britain has been historically successful at building alliances in the Council, but the UK is rapidly losing influence in the Commission and the Parliament. These losses are entirely self-inflicted. Cameron’s Conservatives have withdrawn from the Parliament’s dominant party group, the European People’s Party, leaving the UK as the only member state without a voice in this influential body. Recent governments have failed to create incentives for British officials to build careers in the Commission or even to accept secondments in Brussels. As a result, the UK is now severely under-represented in the Commission, with British nationals making up just 4.6% of officials. The CBI is critical of the UK’s failures in these areas, and believes that the UK is failing to maximise its influence in the EU.

The report comprehensively demolishes the business case for every possible alternative to EU membership, including complete independence, a special free-trade agreement, and the arrangements enjoyed by Norway, Switzerland, and Turkey. No alternative option offers a long-run benefit over EU membership, and the medium-term costs of leaving the EU are considerable. In any scenario, the UK would retain much EU legislation on its own books, have to adhere to new EU regulations to some degree, and lose access to the free-trade agreements negotiated with over 50 non-EU countries.

Leading Conservative, Labour, and Liberal Democrat politicians have welcomed the CBI’s report. UKIP’s Nigel Farage was critical, stating that its findings were predicated on “a sudden end to trading with Europe”. This is not correct. The report concluded that each alternative to EU membership would reduce, not eliminate, trade between the UK and its neighbours. Consequently, British GDP, jobs, and living standards would be lower in a future outside the EU.

Unfortunately, successive British governments have refused to have an honest conversation with the British people about the real facts of European policymaking and the motivations for sharing powers with the UK’s European neighbours. Eurosceptic myths have not been countered. It has been left to organisations like the CBI and major trade unions to make the case for Europe and counter these myths; however, they are not nearly as influential or respected as they once were.

The CBI’s well-researched report is a welcome intervention in the debate over Britain’s place in the European Union. Although the Trades Union Congress and the CBI represent opposing interests and have very different visions for Europe, there is a striking similarity in their evaluations of EU membership and of Britain’s influence in Europe. As a business lobby, the CBI represents a very specific stream of pro-European thought in the UK. Its vision for Europe is not congruent with the PDU’s, nor with those of many political parties, trade unions and civil society groups in the UK. However, one of the pillars of British euroscepticism is a belief that the EU is ruinous to British business. The CBI’s report has shaken the foundations of this faith. Battle has been joined, and without economics on their side, the nationalists will find it difficult to prevail.

Image “centre point” by Clive Darra via Flickr, released under Creative Commons Attribution 2.0.

Image “CBI annual conference 2010” by The CBI via Flickr, released under Creative Commons Attribution 2.0.

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