The Conservative victory at the recent General Election means that it is now certain that there will be a referendum on whether or not the UK should remain in the European Union. A referendum, by definition, is a procedure whereby the voters answer Yes or No to a single question and, at the moment, the question is likely to be “Should the United Kingdom remain a member of the European Union?” Does the precise wording of the question matter? Yes, because in the first place it must be clear, simple and neutral, and secondly, social psychologists have demonstrated that various ways in which questions are phrased can raise expectation in answering which may skew the response.
Leaving that aside, what are the pros and cons of leaving (or not leaving) Europe and what could this mean for UK businesses? The conundrum is that no-one has done it before, so to some extent it’s hard to predict, but the following are certainly points to be considered:
- Trade – probably the first thing that comes to mind because at its commencement the EU (formerly the Common Market) was essentially a common trading platform. Free trade between EU member nations means that it quicker, cheaper and easier for UK companies to export to Europe. But there is an alternative – Norway for example has access to the single market place but is not subject to EU legislation on other issues, such as justice.
- Employment – EU membership means that UK nationals can travel to other EU states to work and of course there’s free movement for other nationals to come here. It cuts both ways, but it’s worth remembering that there are huge commercial sectors, for example agriculture and some leisure industries, that rely very heavily on non-UK labour. Although this issue is tied up with the emotive topic of immigration, leaving the EU and the inevitable curb on free movement of workers could deter the most able individuals from working in the UK, create more complex immigration rules and significantly reduce the pool of candidates for employment.
- Regulations – on the face of it, one of the strongest reason for leaving. Many small and medium-sized businesses would argue that the immense regulatory burden actually restricts their ability to trade. Many individuals feel very strongly that we should be completely free to manage our internal trading. However EU membership has benefits which can’t be overlooked, such as the huge agricultural subsidies. Looking at larger organisations, if we were to leave the EU global industries might cease to manufacture in the UK, in favour of lower-cost EU sites, resulting in the loss of millions of UK jobs
- Political and military influence – leaving the EU would almost certainly diminish UK influence on the world stage. Many experts believe that America would see the UK as a much less valuable ally. The reduction in the armed forces might well leave the UK vulnerable (despite NATO). Although not directly a business issue, a less stable environment would hardly be conducive to commercial prosperity in at least the short term.
One thing is certain – if we leave the EU now, it will be virtually impossible to go back in!
The referendum, when it comes, will be a straightforward ‘Yes’ or ‘No’. The UK would stand alone (once again!) and voters will need to consider the implications of this. The problem with the referendum, when it comes, is that the procedure allows only for a straight ‘Yes’ or ‘No’. There’s no room for ‘Yes, provided that ……….’ or ‘No, unless………’ The UK would stand alone (once again!) and voters will need to consider exactly what this will mean in the 21st century.
The way forward is for negotiations to begin NOW to see if the UK’s position as an EU member nation can be strengthened and improved, especially with regard to deregulation. Only then, armed with the outcome, can we, as voters, make an informed decision at the polls.