Change, or go Why the EU needs to change and how we will get a better deal
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Change, or go
Why the EU needs to change and
how we will get a better deal
A
Business for Britain exists to give a voice to the large, but often silent, majority among Britain’s business community who want to see fundamental changes made to the terms of our EU membership and who support an In/ Out referendum. We are independent and non-partisan, involving people from all parties and no party. Business for Britain is led by Matthew Elliott and Co-Chairmen Alan Halsall (Chairman, Silver Cross) and John Mills (Chairman and Founder, JML) and is supported by a strong Board including Neville Baxter (Director, RH Development), Harriet Bridgeman CBE (Founder, The Bridgeman Art Library), Dr Peter Cruddas (Chief Executive, CMC Markets), Robert Hiscox (Hon. President, Hiscox Ltd), Daniel Hodson (Former CEO, LIFFE), John Hoerner (Former CEO, Tesco Central European Clothing), Brian Kingham (Chairman, Reliance Security Group), Adrian McAlpine (Partner, Sir Robert McAlpine) and Jon Moynihan OBE (Former Executive Chairman, PA Consulting).
I n January 2013, David Cameron
announced in his Bloomberg Speech
that a future Conservative Government
would renegotiate Britain’s EU
membership and give voters a say in an
In/Out referendum.
Senior government ministers have
made it clear that if there is no change
then they expect the British people to
vote for Out and would do so themselves. The media
have also been told that the Prime Minister could
personally lead a future Out campaign if he cannot secure
a better deal.
This booklet explains why the EU needs to change and
what the consequences for the UK would be if it refuses
to reform. Many thanks to Ruth Lea and Jon Moynihan for
their input into this booklet. You can find extra information
at www.businessforbritain.org/COGSources.pdf.
Matthew Elliott
Chief Executive, Business for Britain
1
Why the EU needs to change
The EU faces big economic and social
challenges:
n I ts economy is shrinking relative to
other countries across the globe
n Its population is aging
n Its public spending is out of control
n I t follows flawed economic policies
that result in rolling economic and
political crisis
These challenges will not be solved through
minor changes here and there. If the EU is going
to remain prosperous in the 21st Century it
needs to introduce some very significant reforms.
There needs to be a step change in attitude from
EU leaders – a change in attitude which very few
politicians outside the UK have yet shown.
2
Why we need a better deal with the EU
“
There is a crisis of European
competitiveness, as other
nations across the World
soar ahead… Taken as
a whole, Europe’s share
of world output is
projected to fall by
almost a third in the next
two decades. This is the
competitiveness challenge -
and much of our weakness
”
in meeting it is self-inflicted.
“Britain will not be part
of an inexorable drive to
an ever closer union.”
Sources: Bloomberg Speech and the LBS Speech
3
The EU is in decline…
When the UK joined
the EU in 1973, the
bloc accounted for
37%
of World GDP
By 2025 the EU
will account for just
22%
of World GDP
Sources: US Government
4
…and is falling behind other countries
Even after enlargement, the Eurozone is lagging
behind other major economic blocs - including
the Commonwealth, who we abandoned
economically to join the ‘Common Market’
20
18
GDP, $ trillions
16
14
12
10
es in
a lth on
e
at Ch ea
St w roz
d on Eu
nite m
U m
Co
Source: IMF, 2017 estimates, GDP based on PPP
5
The EU’s relative population is declining…
When the UK first started
thinking about joining, the EU
accounted for
13%
of World population
It now accounts for just
7%
of World population
During the same period India’s population increased
from 450 million to over 1,200 million
Source: World Bank
6
…and it has an aging society
In 2020, the ratio of working age
people to pensioners in the EU will be
3:1
By 2050 it will be
2:1
In 2006, France’s pension liabilities accounted for
362% of French GDP. In the UK it was only 91%.
Sources: Eurostat and European Central Bank
7
EU governments are spending more
“
Europe accounts for
just over 7% of the
world’s population,
produces around
25% of global GDP
and 50% of global
social spending.
”
Source: Financial Times, December 2012
8– more even than communist states
In China there is open discussion about how
they are economically overtaking the West
thanks to prolific social spending, particularly
in the EU
50
48%
Government expenditure as % of GDP
40
30
24%
20
10
0
EU China
Source: IMF, 2014 estimates
9The EU’s budget is too big...
Security and
“citizenship” R&D, sustainable
€1.7 bn energy, training
Common €11.4 bn
Agricultural
Policy
€56.5 bn
TOTAL
€135.5
Billion
Distribution
Special to poorer
Instruments countries
€0.4 bn Admin
EU Foreign
Policy, aid €51 bn
and accession
€8.4 bn €6.2 bn
Source: European Commission, 2014 figures
10...and there is too much red tape
Since 2010, the EU has
introduced over
3,500 new laws
affecting British business,
adding up to over
13 million words
A business person would
have to read for
55 minutes per week
just to keep on top of the
new red tape
Source: Business for Britain, October 2013
11Britain’s EU payments are going up…
Our net contribution to the EU has risen by
over200% in the last decade, but our
economy has only grown by 14%
16
14
Gross
contribution
12
UK contributions to the EU, £ billions
10
8
Net
contribution
6
4
2
0
1973/74
1977/78
1981/82
1985/86
1989/90
1993/94
1997/98
2001/02
2005/06
2009/10
2013/14
2017/18
Sources: House of Commons Library and Office for Budget Responsibility
12…and the value of our rebate is falling
Since Tony Blair changed the formula in
2005, the UK has lost over £10 billion
7
Value of rebate
without
6 Tony Blair’s
changes
Value of UK rebate, £ billions
5
£10.4
4 Billion
lost Actual value
3 of rebate
2
1
0
2007 2008 2009 2010 2011 2012 2013
Source: Business for Britain, May 2014
13EU regulation is very expensive…
The British Chambers of Commerce has shown
that the total cost of EU regulation is
£7.6 billion per year
Since the Lisbon Treaty came into force in
December 2009, it has cost British businesses
£12.2 billion (net)
in extra regulation
“The advantages of
being members of the
Union are not obvious.”
Former Labour Chancellor,
Dennis Healey, May 2013
Sources: BCC, Business for Britain and Channel 4
14…hitting all companies, even non-exporters
In January 2014, Business for Britain
calculated that less than 5% of British
companies directly export to the EU, but EU
red tape hits 100% of companies
Following this, Nick Clegg announced:
“Let’s make sure that small
firms which don’t export,
such as hairdressers and
newsagents, are exempt from
EU regulation unless there’s
a cast-iron reason.”
Sources: Business for Britain, January 2014 and The Observer, April 2014
15Leading economists are worried…
Fifteen years since the Euro was created, to
much acclaim, we have had one major Euro
crisis and more are predicted for the future
“ We have this
almighty mess…
markets have figured
out that the monetary
union, as created,
doesn’t work.
”
Source: Jim O’Neill, Former Chairman of Goldman Sachs Asset Management
16…and young people are suffering
The penalty for unwisely joining the Euro has
been horrendous for the weaker countries and
the problem has not gone away
70
60
% population under 25 unemployed
50
40
30
20
10
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Italy Spain Portugal
Greece Ireland United Kingdom
Source: Eurostat, selected countries
17It’s difficult to make changes…
The Commission proposes new laws in the
EU, but the UK’s representation has declined
dramatically and many officials are adamantly
opposed to the sort of changes that the UK seeks
12
% of European Commission staff from UK
10
8
6
4
2
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Not a single person from the UK Government’s re-launched EU
Fast Stream has gone on to join the the European Commission
Sources: British Banking Association and the European Commission
18…and we’re outvoted in the EU Parliament
When the UK joined
the EU we had 20%
of the votes, today
we only have
1973 9.5% of the votes 2014
British MEPs voted against 576 EU
proposals between 2009 and 2014,
but 485 still passed and became law
Source: Business for Britain, August 2014
19We’re also overruled in the Council
In 1973, the UK had 17%
of the votes in the
Council of Ministers,
now it only has 8%
The UK has not managed
to block a single proposal
from the Commission
passing through the Council,
despite trying 55 times
This is worrying because
the forthcoming
renegotiation will be
decided by the Council
Sources: Business for Britain, March 2014 and the Council of the European Union
20How we will get a better deal
As the first section has shown, big changes
are needed.
The path ahead is clear:
n Renegotiation
n Reform
n Referendum
As Boris Johnson’s chief economist,
Dr Gerard Lyons, has said, we’re in a
win-win situation.
Change, or go
21Change, or go
Unless there is a “substantive renegotiation”,
senior ministers have concluded we should leave
Q. If there was a
referendum now
would you vote to
leave the EU?
“
Yes. I am not
happy with our
position in the
European
”
Union
“I’m on the side of the argument that
Michael Gove has put forward”
Sources: The Andrew Marr Show and BBC News, May 2013
22A referendum is key to securing change
“The status quo is not an
option. Ministers must pursue
reform and renegotiation .”
John Longworth,
British Chambers of Commerce
“IoD members… recognise
that the EU has to change, and
it makes sense to put such
changes to the British people.”
Simon Walker,
Institute of Directors
“It is time that Labour’s
leadership took a new look at
the referendum question.”
Len McCluskey,
Unite
Source: Various
23Voters and business leaders want a say…
Want a vote:
Want a vote:
70
63% 66%
60
% Support for a referendum
50
40
30
20
10
0
Public Business
Source: YouGov, June 2014 and November 2013
24...but if nothing changes should we go?
“ If the British people decide
the decision is they want
to leave the European
Union, then that isn’t
something that I’d be
afraid of. I’d embrace
the opportunities that
”
would create.
“We could negotiate a
generous exit, securing
European Free Trade
Association-style access
to the Common Market”
Sources: House Magazine, September 2013 and Bloomberg, August 2014
25Q1. Will inward investment be affected?
The UK is a leading recipient of Foreign Direct
Investment and in 2012 had a higher inflow
than any other EU country in the OECD
180
160
140
FDI inflows, $ billions
120
100
80
60
40
20
0
USA Australia UK Canada Ireland
Source: OECD, 2012 figures, top five countries
26No: Investors want a “looser relationship”
In a recent survey72% of US
investors said that they
want a looser relationship
between Britain and the EU
and 66% of Asian investors agreed
In a poll of FTSE 100 chairmen 81%
said
that they wanted to see Britain renegotiate its
relationship with Brussels. 63%want a return
of social and economic policies to Westminster
“Whether the UK will stay in the
EU or not, will not do any harm
to trade and economic ties or
financial relations between the UK
and China.”
Wang Hongzhang
Chairman, China Construction Bank
(The second largest bank in the World in 2011)
Sources: Ernst & Young, Korn Ferry and BBC News
27Q2. Will trade be affected?
The UK is one of the top five trading nations
in the world:
3,500
3,000
2,500
Exports, $ billions
2,000
1,500
1,000
500
0
USA China Germany Japan UK
Source: IMF, 2013 figures, top five exporting nations
28No: We have a trade surplus outside the EU
30
Surplus
20
Balance of goods and services, £ billions
10
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
-10
-20
Deficit
-30
-40
-50
-60
EU Rest of the World
Our EU trade deficit is getting worse but we
have a growing trade surplus with the rest of
the World
Source: ONS
29Q3. Will jobs be affected?
1
m
5
30
j o bs
9,
94
,000 jobs
4
00
,0 0
0
0 jo
bs
jo
France
bs
exported €1.3bn
421
worth of wine to
the UK in 2013
Spain
exported €740m
worth of fruit to
the UK in 2013
30No: We’re the EU’s biggest market
The UK is the EU’s
single largest market
Germany – in 2013 the
exported
1 €16bn worth EU exported
€280 billion
m of cars to the
ill
UK in 2013
io
worth of goods
n
5
jo
bs
to the UK. Neither
mil ion j o b s
l
side will have any
appetite for a
‘trade war’
Italy
exported €500m
worth of shoes
to the UK in 2013
Sources: House of Commons Library, 2011 figures, IMF and UN Comtrade
31The future is clear: Change, or go
“
The status quo
is simply not
acceptable.
The status quo
is not in Britain’s
interests… if the
offer by European
partners is nothing,
no change, no
negotiation, I am
pretty clear what
the answer of the
British people in
the referendum David Camero
”
is going to be. may campaign n
to leave the E
U
Sources: Daily Telegraph, 23 June 2014 and The Andrew Marr Show, July 2014
32It is clear that the EU needs to change. To get the big reforms
we want and the renegotiation we need, it is vital that we
have a referendum by the end of 2017.
We need an In/Out vote to show that we are serious.
Over 800 businessmen have already joined our campaign
for a better deal. People who have signed up (in a personal
capacity) include:
Lord Bell (Chairman, BPP Communications);
Roger Bootle (Founder and MD, Capital Economics);
John Caudwell, (Founder, Phones4u);
Peter Goldstein (Co-founder, Superdrug);
Lord Harris, (Chairman, Carpetright);
Nick Jenkins (Founder, Moonpig.com);
Lord Kalms (President, Dixons);
Sir Christopher Meyer (Former Ambassador to the
US and Germany);
Helena Morrissey (CEO, Newton Investment Management);
Charlie Mullins (Founder and MD, Pimlico Plumbers);
Lord Rose (Former Chairman, Marks and Spencer); and
Lord Wolfson (Chief Executive, Next).
If you would like to join them please sign up at:
www.businessforbritain.org
33for JOBS,
for GROWTH,
for A BETTER DEAL
55 Tufton Street, London SW1P 3QL
0207 340 6070 (office hours)
info@businessforbritain.org
www.facebook.com/ForBritain
@forbritain
www.businessforbritain.org
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