Manufacturing: Our future in Europe

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Today EEF publishes its report Manufacturing; Our Future in Europe - Stronger Leadership, A Stronger Economy.Its title reflects the strong leadership that will be essential to ensure that the debate that has been started on Europe delivers the right result for our economy. The decision Britain makes on its future relationship with the EU will have major implications for our economy and its ability to grow, generate the higher living standards and create the high quality jobs that we desperately need. Our discussions with members of all sizes and sectors across manufacturing have sent out a resounding message that we are relaying to leaders of all the main Parties. They are telling us that to create a stronger better balanced economy we need to be part of a successful European Union that maximises the opportunities for industry to innovate, trade and grow. And we need to see all of the main parties demonstrating the leadership that will ensure that we achieve this.Our message to the Prime Minister is clear. We welcome the debate that he has started on the future of Europe and our role in it. But if he is to achieve his aim of making the case to the British public that it should vote to stay in a reformed Europe, there is now an urgent need to reframe the debate about Europe. Going forward, we need to move on from talking about what is wrong with Europe, to look at what can be achieved if we can get it right.And, of course, part of that is going to be about persuading the EU to cut the amount of regulation it is bringing forward, that any new measures need to be much better thought through and that it must get serious about tackling the volume of existing regulation. This is easier to say than to achieve. But there are signs that the tide is turning. Individual EU member states are now carrying out reform programmes to kick start their economies, increasing the pool of like-minded partners. And working with this growing band of allies, we are starting to make progress on important issues such as the EU Budget, and, for now at least, persuading the Commission to rethink Solvency II proposals on pensions that would have been highly damaging for business investment. Coming up to the European Council meeting later this month, the government has set out its agenda for change. It's an ambitious agenda and one that we support. We want to see more of this and where it makes progress for government to be louder in celebrating its successes.But important as it is to get things right on regulation, the real prize for industry and for our economy is much larger than this. In a recent poll, some 85% of EEF members who expressed an opinion said that they wanted to stay in the EU. And despite all the recent negative publicity surrounding Europe, that proportion is unchanged from ten years ago. This shouldn't really surprise anyone. Europe remains our largest market, the single market has made trading with it much easier and for many companies Europe is often a springboard for exporting to the rest of the world. Three in five manufacturers tells us that the EU will remain a key part of their export strategy.Some might say that the real opportunities lie outside Europe. But that ignores the reality that trade deals today are increasingly negotiated by trading blocs. The Trans-Atlantic Trade and Investment Partnership is grabbing all the attention. But if the European Commission completes all the trade deals on the table, this would add some €275bn to the region's GDP. And there's still another 30% to go at for the future in areas where talks are currently not progressing such as China, Russia and Australia.Looking beyond trade deals, completing the single market could add 7% of GDP to our economy, harmonising products another 0.3% of GDP while our share of the Horizon 2020 programme to support innovation by British-based business is likely to be £9bn. These are all large gains to be made for our economy.On trade, innovation, product standards and completing the single market, work is therefore underway and the gains are potentially huge. Europe is also waking up to the dangers of too much regulation and is listening to the arguments that Britain is making. In contrast there currently seems little appetite from the rest of EU to allow us to negotiate a special deal on specific areas of regulation on which the gains are uncertain.So the choice we face is a stark one. Do we get stuck in, help to push Europe in the right direction, make sure we get our share of the gains and sell this to the British public? Or do we continue to complain about what is wrong with the EU, seek to negotiate a special deal that may well not be attainable and fail to make a compelling case to the British public on why we should remain in Europe?The economic consequences of this choice will be significant. Left outside Europe, our economy won't collapse but we risk missing out on major gains from increased trade, investment and innovation. Just as the party is starting to get going, will we be left outside in the cold banging on the door to get let back in again? This is a risk we cannot afford to take.


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