Let's not get distracted on an answer to the UK and Europe, when no one knows the question

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EEF's Chief Executive, Terry Scuoler, responds to the recent debate on Britain's place in the EU.

Business is one of the first audiences to be asked about the UK and its place in Europe, with our views seized upon by both pro and anti-European factions as a vindication of their respective positions. This is natural as Europe matters so much to jobs and our prosperity, especially given half our manufacturing exports go to the EU.

The problem is that it is a highly complicated, political issue and impossible to come up with a homogenous business view. Business has enough to worry about in the current economic climate, without trying to get to grips with slightly unreal debates about fiscal union, Treaty change or the necessity and timing of referenda.

But, there are at least two certainties, on which most of us in business would agree:Firstly, there are things that the EU does, which we would like to see changed, particularly its tendency to overregulate and bring forward proposals which threaten our competitiveness. This is not a call to abandon all EU regulation, as most sensible businesses would recognise that markets need rules. We do need, however, to see the Commission and Parliament acting to promote growth and not, as is too often the case, tying businesses up in inflexibilities, which run counter to the harsh reality of global competition. Unfortunately, while this message may be getting through at Member State level, it has not resonated in Brussels, where the Commission seems wedded to regulating and legislating at all costs.

Secondly, business recognises the importance of the single market, a major destination for UK exports and a significant factor in attracting inward investment. This is especially so for manufacturing, where many companies have used the UK to access European markets. British business is doing more to successfully broaden trade links with the rest of the world, but the EU is likely to remain our largest trading partner for the foreseeable future. We would be foolish to imperil our access to the single market. Equally EU Member States must not forget that they have a trade surplus with the UK and which could be at risk if, for any reason, they sought to apply restrictive measures to UK exports.Our relationship with the EU is a trade-off between the benefits of the single market and concerns we may have about over-regulation. This brings us to the current debate over a referendum. The on-going Eurozone crisis and drive for greater fiscal and political union is adding to the calls for such action. The “have one's cake and eat it” simplistic view of cherry picking those elements of EU membership which are most attractive to the UK is however unhelpful at the present time.

We also do not know which question would be asked. Would a renegotiated agreement be on the table, or would we be asked whether we want to be half in, half out like the Norwegians? Would we go down the Swiss route of simple bi-lateral trade agreements? There remain a host of unresolved questions even before taking into account that the EU could look very different in a few years given the likelihood of deeper fiscal integration.

The overriding current priority remains the resolution of deficit reduction and promoting growth. In some of the southern peripheral states labour market reform and unemployment also needs to be urgently addressed. So, when I am asked about manufacturing's view of a referendum on Europe my response is clear. The question of a referendum is not today's priority for manufacturing. The UK should instead concentrate on working with our European partners to address immediate issues which will make a real difference to growth such as completing the single market, addressing labour market flexibilities and progressing trade talks with new and emerging markets.

Europe remains a very important market for the UK and global competition is a pressing issue for all manufacturers across the EU. At a time of great difficulty for the Eurozone and the EU any precipitate political action by the UK to further damage the current structure of the EU would be seen as a betrayal to our partner nations and could lead to long term damage in relations. Yes, the time may come for a sensible and constructive debate on the selective return of aspects of regulation and legislation to the UK. But, manufacturers and UK business in general would be best served by policy makers concentrating on the important job in hand of growth and wealth creation.


This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

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