EU Referendum – Are Small Businesses Better Off In or Out?
The hot topic in the UK right now is the EU Referendum on whether Britain should remain in the European Union (EU) or not.
Why should I concern myself with this really? And how does staying or leaving affect my business and other small businesses in the UK. Well, because the Government and all other stakeholders say so. I am not concerning myself with the opinion of the military, immigration chiefs etc but SMEs and business leaders in general. So, is this ‘common market’ worth staying in? or should us small business owners be looking at taking the future into our own hands and exit the EU?
One thing is for sure, arguments from both sides have created a true state of CONFUSION not with the apocalyptic narrative Mr Cameron and his friends have been peddling recently. For a while I have been leaning towards the ‘STAY’ vote however, right now I’m experiencing the yo-yo effect. The alarmist nature of the ‘IN’ campaign does not help matters one bit. What are we really voting for? Lets look at this EU Referendum debacle and what leaving the EU really means for UK small businesses?
‘IN’ campaigners claim if we vote to leave the union, businesses will have to negotiate new trading relationships with the new 27 member organisation in order to allow them sell their goods and services to EU countries without being hit by excessive tariffs and other restrictions. ‘OUT’ campaigners believe Britain can always maintain its strong links with the EU nations and negotiate better policies with them.
According to the BBC, some campaigners argue that Britain could emulate some models adopted by other countries not part of the EU. Like:
The Norwegian model: Britain leaves the EU and joins the European Economic Area, giving it access to the single market, with the exception of some financial services, but freeing it from EU rules on agriculture, fisheries, justice and home affairs.
The Swiss model: Britain emulates Switzerland, which is not a member of the EU but negotiates trade treaties on a sector-by-sector basis.
The Turkish model: The UK could enter into a customs union with the EU, allowing access to the free market in manufactured goods but not financial services.
The UK could seek to negotiate a comprehensive Free Trade Agreement with the EU, similar to the Swiss model but with better access for financial services and more say over how rules and standards are implemented.
The UK could make a clean break with the Europe, relying on its membership of the World Trade Organisation as a basis for trade. However, many of those campaigning for exit the report claims argue that none of the country-based models would work for the UK.
Another problem is that the EU is UK’s main trading partner. The partnership is worth over £400bn a year which is 52% of the total trade in goods and services. Can we afford to forego this partnership with such a high level of trade in existence? Well, exit campaigners claim the EU is not such an important partner at least not as important as it used to be; especially with the present chaos in the eurozone. They also claim leaving the EU will only place the UK in the same position as the US, China, India and Japan who still manage to export to the European Union relatively easily. Furthermore, the UK could then establish bilateral trade agreements with emerging markets like Brazil, India and Singapore.
But what is the take of Entrepreneurs and business leaders on this EU Referendum? On or around the 26th March the ‘OUT’ campaigners published a list of 250 business leaders who support leaving the EU. Names like Michael Geoghegan (former HSBC Chief Executive), John Caudwell (Founder of Phones 4U) and Sir Rocco Forte were in the list. This comes after bosses of 36 of the largest listed companies in Britain signed a letter urging voters to remain in the EU as ‘IN’ campaigners rubbished the list of 250 as lacking substance with no businesses to back exit, just personal opinions.
Confusing? There is more. Small Business owners also signed an open letter urging Britain to leave the European Union. In the letter, SME owners pleaded with Britons not to listen to “a minority of managers from Britain’s largest companies” who want Britons to stay in the EU.“As entrepreneurs, we deal with the EU’s constant diet of unnecessary regulations which add to our cost base, reduce our bottom line, and raise prices for our customers for no return” the letter also says. As far as business is concerned, the EU Referendum campaign is increasingly looking like a battle between large companies who want to remain in the EU and SMEs who generally want to leave.
My favourite Entrepreneurs – Richard Branson and Alan Sugar naturally have their own opinions on the matter and guess what? It is split. Branson is against leaving the EU saying: “Leaving the EU would do enormous damage to entrepreneurs throughout the UK, both small and large. That in turn would inflict damage upon the rest of the country.” No- nonsense Alan Sugar is against staying -“I blame the fact that we are part of Europe. I blame the fact that the Government doesn’t have the guts to say to Brussels: I don’t like it, we should start taking control of our own safety and health regulations and our own claims culture. I’ve been told we can’t because we are in Europe. I say, enough is enough!”
This is what I think, I think for all the faults of the EU and its unnecessary overbearing big brother character as well as the unshiftable bureaucratic burden we have to carry in the UK, it still offers access to 500 million people, 21 million companies and £11 trillion in economic activity; that remains a goldmine to small business owners whether we like it or not. For me, the grass is NOT always greener on the other side, and the devil you know . . .
However, forging new trade partnerships is tempting, very tempting but could be costly and certainly won’t be immediate. As a business owner, I will cautiously swing on the side of staying because leaving will only add unnecessary tariffs and restrictions on EU trade which would consequently distort trading in Europe. In simpler terms, I want to be able to retain the opportunity of selling my products to the 500 million people in Europe without having to reestablish trade relationships. If we leave, there is no guarantee that the EU will allow the UK the benefit of free trade it offers the likes of America and other emerging economies. We live in the era of globalisation, as such we should maximise the increase in international trade and not erect unnecessary barriers to stifle trade.
Right now I vote ‘IN’. What do you say?