James Ashton: Britain needs Europe but Cameron must still fight for the best deal

While business leaders remain determined to avoid a Brexit they expect the PM to negotiate hard but also swiftly
Power play: David Cameron must lock horns again with EU Commission president Jean-Claude Juncker
Yves Herman/Reuters
James Ashton21 May 2015
WEST END FINAL

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In 1975, when the UK voted on continued membership of the European Economic Community, the CBI employers’ body hired a train to travel around the country to sell the benefits of staying put. Last night, over dinner at the Grosvenor House Hotel, its campaign to remain in Europe steamed out of the station all over again.

The business lobby has learnt much from last year’s Scottish referendum vote. What should have been a formality turned into a last-minute, panic-button campaign, after some bosses were cowed from speaking out sooner by Alex Salmond’s bullying. It is determined to get on the front foot with Europe, with CBI president Sir Mike Rake calling the vote a choice “between shaping the future and retreating into the past” and urging his members to speak out about the benefits of remaining in the 28-nation bloc.

Hurtling down the track is a risk that many bosses would rather wasn’t being taken. But now that David Cameron’s vote on our future has become a reality, they are setting out their stall. The vast majority of bosses I speak to favour staying in a reformed European Union; that a Brexit — messy, unpredictable and costly — must be avoided. What is less clear is what good reforms entail. And if they aren’t secured, at what point the UK should think more carefully about going it alone. In this debate, let us establish quickly what success looks like.

It is a referendum that could take place sooner than we think. Those in the hall last night held out hope that the “neverendum” might be restricted to a year — giving Cameron enough time to negotiate with European Commission president Jean-Claude Juncker without prolonging the agony of uncertainty that is already causing some international investors to think twice about putting money into the UK. Some believe D-Day could be as soon as May 5 next year, the same day as London picks its next mayor and Scotland elects a new parliament.

Canvassing diners last night, there are three things that loom large on the reform hitlist, none of which require treaty change. Firstly, repatriate employment laws that recruiters say harm the UK’s chances of building a flexible labour force. They blame Brussels’ intervention for unfilled skilled roles and the difficulty in hiring from Asia or the United States.

Secondly, the EU must proceed much faster to create a single market for services, so that some of the UK’s powerhouse activities — led by London’s white-collar army of accountants, lawyers and consultants — can grab more opportunities on the Continent.

Thirdly, competitiveness, which takes many forms. That Europe has twice the energy costs of the US and twice the labour costs of Asia acts as a reminder that something has got to give. There should be more items pressed for, such as an idea championed by rival lobby group Business for Britain that the 95 per cent of British firms who don’t export to the EU are exempted from EU rules.

The benefits of EU membership are there for all to see in London, from the Canary Wharf towers where much euro-denominated trade is handled to the multinational companies that base European headquarters here because it is the most convenient entry point to other markets.

There is also the feeling that much of Europe is with Cameron, that Germany wants many of the same reforms. Even the commission, whose vice-president Frans Timmermans unveiled an efficiency reform programme this week, is not unsympathetic. The UK might not be yet pushing at an open door but it is playing the role of stalking horse for shaking up an institution that has struggled to keep up with the demands of globalisation.

The danger is that the business world blindly backs Cameron, that whatever piece of paper he waves coming back from the Continent is good enough for them. Chief executives are great negotiators: they understand give and take but they can also know when to apply gloss to a poor deal.

I think the leaders of construction-equipment maker JCB were only saying this week what other bosses are thinking — that the UK should leave if Cameron is unsuccessful. To suggest that corporate support is a foregone conclusion would be wrong. There are already plenty of doubters of business leaders’ motives, such as the Trades Union Congress, which is warning that major firms could use EU reforms as an excuse to water down workers’ rights.

More work must done on what pulling out looks like. There is the immediate impact — a beanfeast for lawyers, who believe extricating the UK from the EU would make taking Greece out of the eurozone look like a cinch. And then afterwards, if British firms are still to be governed by EU standards when they trade, what is the point of ceding our influence in setting those rules?

In 1975, the debate portrayed European membership as a way of taking advantage of better food prices. Now it is about jobs and immigration and the balance between the EU propelling the UK forward and holding us back.

There are those who believe the UK’s options have narrowed in the past 40 years, that we must remain in Europe if we want to trade toe to toe with Chinese and Indian superpowers. To leave would be to junk the numerous trade agreements struck at the EU level — even if forging such deals, including the latest TTIP accord with the US, proceeds at a glacial pace.

Of course that holds water. What Cameron needs to do is demonstrate to all is that this trading bloc can be turned further to our advantage but that he is not afraid of turning away if it doesn’t. The business world should back a good deal for the UK — but not simply any deal.

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