Would Britain be better off leaving the EU? Whatever appeals the Yes and No campaigns will make to voters’ emotions if and when a referendum takes place, this is the question that’s likely to determine the outcome. Unsurprisingly, it’s one of those issues where the voice of business gets listened to, which would be a good thing, of course, if there was such a thing.
Yesterday, ratings agency Standard and Poor (S&P) published a report saying that a Brexit could damage the City’s pre-eminence in global finance. In the opposite corner, non-partisan lobby group Business for Britain later published the conclusion of its own 1,000 page analysis arguing that Britain would be better off leaving if it can’t satisfactorily renegotiate the terms of its membership.
Those terms are ‘unacceptable and only going to get worse’, says Britain for Business, which has the support of luminaries like former M&S boss Sir Stuart Rose, investor and MT regular Luke Johnson and Next’s chief executive Lord Wolfson.
‘Britain’s economy has been held back by the demands of a regional bloc whose economy has become increasingly inward-looking and uncompetitive, and whose policies, not least the flawed single currency, have created the conditions for ongoing, persistent economic crisis’, the report said.
So far, so UKIP. The counter-argument is of course that leaving the EU would deny Britain easy access to its key market, in turn making it less attractive to non-European companies looking for a place to do business. This is the view endorsed by S&P, which warned of the effect a Brexit could have on financial services.
Non-European banks ‘could ultimately consider other locations as bases for their European operations’, potentially undermining the City, S&P said. ‘Post-Brexit, the centre of gravity in European financial markets could well move further toward Frankfurt, Paris, Dublin, or beyond.’
Britain for Business, which backs leaving the EU only if David Cameron can’t renegotiate membership to exclude aspects like ‘ever-closer union’, is having none of that.
‘The oft-cited claim that [the UK] would lose access to a large and important market fails to stand up to scrutiny,’ its report says, arguing that the steady reduction in international tariffs over the last 40 years makes the EU ‘redundant’.
Besides, financier and Britain for Business member Peter Cruddas argues in the Telegraph, the UK ‘would be likely to retain, via a bilateral treaty, passporting rights with EU member states’.
The big disagreement is over precisely the shape those treaties would take. Could Britain get all the benefits of EU membership with none of the costs? The stakes are certainly high – one report predicted a best-case Brexit scenario increasing GDP by 2.2% by 2030, and a worst case cutting it by 1.6% - but frankly no one knows.
How could they? No country has ever left the EU (unless you count Danish dependency Greenland), or indeed renegotiated unique terms of membership. It's unchartered territory, and the best we have are (no doubt highly) educated guesses. Business leaders and the country at large will ultimately have to wait and see the results, if and when the status quo actually changes.