Industry chief warns of “serious economic downturn” if Britain leaves the EU and says debate has become “fevered and unpleasant”
The head of Britain’s manufacturing group has warned that a vote to leave the EU will lead to a serious economic downturn resulting in hardship for the British people.
Terry Scuoler, the chief executive of EEF, the manufacturers’ organisation gave the warning as a European think tank published its analysis of the impact of Brexit in Brussels. Speaking at the launch of a report by the Cologne Institute for Economic Research, Mr Scuoler said the debate in the UK had become “fevered, unpleasant and at times quite farcical” and warned there were serious economic issues that need to be addressed.
In his speech he said:
“I do feel enormous sympathy for my fellow countrymen. We are being assailed by a blizzard of often contradictory information dressed up as economic fact and the sometimes vile misinterpretation of issues concerning migration, security, and welfare as being linked to our membership of the EU. It is a fevered and unpleasant and at times quite farcical debate which I fear can only get worse as we approach the 23rd June.”
He warned there could be a significant downturn in foreign investment following a decision to leave the EU, which is inextricably linked to jobs.
“A net FDI inflow of £28bn contributed to British private sector investment of £169bn in 2014 and in turn helps drive research and development, innovation, productivity and industrial output. I suspect also that some of the other £141bn of investment is linked to overseas companies headquartered in the UK to, in part, access the wider EU market.
“It is hard to accept that some of that FDI is not directly linked to the UK’s membership of the EU and access to the tariff free and open market of 500m people which is the commercial target of many of the global businesses who have their European Headquarters in the UK.
“The other key benefit of FDI through its link to investment and innovation is jobs. I do not believe some claims that 3m jobs, might go if we leave. I do firmly accept however that there is a link between FDI and jobs. The figure that my own organisation has used publicly is one million plus – an exit would therefore result in job losses and I fear that many of them would be of high quality jobs.”
He also said that both the manufacturing and service industries rely heavily on migrant labour and any restriction on freedom of movement would also damage the economy.
“The UK economy is heavily reliant on economically active migrant labour. Not only is our service sector heavily dependent on them, my own industrial sector is currently made up of 10% of EU nationals without whom it would not function.”
And he warned that a potential devaluation following a Brexit vote could drive up consumer prices and the cost of borrowing:
“Devaluation if it were to occur following an exit could drive up consumer prices through inflation and require monetary policy adjustment in the form of higher interest rates. This matters because the British are also a nation of house buyers and borrowers. Access therefore to cheap finance is important not only to support house purchase - which is an extremely emotive issue in the UK - but also to support businesses, particularly SMEs who are so dependent on affordable access to finance and credit.”