Credit: MarketInvoice

Politicians can't agree if an EU vote would be good for business

The Tories want a referendum in 2017 but their opponents warn it could lead to catastrophe.

by Jack Torrance
Last Updated: 15 Jun 2015

Exactly one month from election day, the three main parties took the opportunity this morning to set out their stall on what they would do for businesses. The Sunday Times debate between the Lib Dems' business secretary Vince Cable, Tory business and energy minister Matthew Hancock and Labour's shadow business secretary Chuka Umunna, was a rather more polite affair than the seven-way bunfight between the party leaders last week.

It's possible that reflects the three mens' approach to politics, but it's more likely because they seem to broadly agree on most of the issues at hand. Except, of course, on the issue of an EU referendum. While the Tories have spent the last couple of weeks laying into Labour's apparent lack of support in the business community, Ed Miliband has at least had his opposition to a referendum up his sleeve as a sign he understand what companies need.

But would a referendum be such a bad thing for business? Hancock, obviously, says not. While some have warned of a two-year death grip of uncertainty if the Tories get their 2017 poll, he said getting a referendum done would help settle the issue.

'I don't think that it brings uncertainty, I think it resolves an uncertainty because the uncertainty is there anyway, because there is an unhappy relationship between the British people and one of our key international obligations and institutions,' he said. He insisted that business investment wouldn't go down as a result, pointing out that it's risen 7% in the two years since the Prime Minister announced his plans to hold a vote.

Umunna wasn't convinced, though. 'You can take the uncertainty that was created by that Scottish referendum and multiply it 10-fold to give you just the beginning of the sense of uncertainty that would be created by this referendum,' he said.

'We've learnt from Scotland the perils of opening this Pandora's box around a referendum,' Cable added. 'Because even if you win with a modest majority, the people who are opposing will not give up.'

Read more: Umunna and 10 other public figures on how business can win back the public's trust

Hancock also implied the threat of a Brexit could help Britain get its way when it comes to reform. Responding to a rhetorical question from Cable, who asked 'why on earth' Germany and the other major countries would cave in to British demands, he said, 'Because they want us to be in the EU.'

Would that actually force their hand? Cable doesn't think so. 'We've already seen with Greece, that once you adopt this threatening, unilateralist approach, then things become very difficult,' he said. Umunna echoed that. 'We've kind of got into this sulky, obstructionist tendency, when actually we should be leading Europe, he said. 'Why don't we be the ones leading the charge on reform?'

To be fair to Hancock, he rightly cited a survey of businesses that found 77% are in favour of a referendum. But then there's always the chance Britain could vote to leave, something the majority of businesses oppose. The squabble comes on the same day former PM Tony Blair decided to add his tuppence worth to the election campaign, praising Miliband's decision to resist calls for a referendum.

'Think of the chaos produced by the possibility never mind the reality of Britain quitting Europe,' he said. 'Jobs that are secure suddenly insecure; investment decisions postponed or cancelled; a pall of unpredictability hanging over the British economy. Do we really think this is the time in which to put into play our very membership of the European Union, the largest commercial market and most developed political union in the world?'

The rest of the business debate was for more consensual. There was much back-slapping about the, admittedly significant, increased number of women on boards, although all three accepted the big need to improve the number who hold executive power rather than just non-exec positions.

There was little appetite to criticise foreign buyers of British companies, a controversial issue stoked by Kraft's takeover of Cadbury and Pfizer's dilly-dally with AstraZeneca. Hancock, Cable and Umunna were keen to emphasise that time-worn phrase that 'Britain's open for business,' although the latter said the Government should be able to intervene should a proposed takeover threaten Britain's science and R&D skills base.

There may be a lot of consensus among politicians as to how business should be treated, but it's clear the issue of an EU referendum will rumble on way beyond the election. 


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