In or Out of Europe? the Decision is yours!!

Speaking to Managing Directors, FD's and the general work force of SMEs daily it seems that a lot of people are undecided and cautious.  European elections are weeks away, the Clegg-Farage TV debates are about to kick off, and there's a huge question mark over Britain's place in the EU. 

Should Britain quit the European Union? Or should it stay? What, indeed, would quitting mean? The hard-line eurosceptic view can be summarised in three phrases: our plight is dire; attempting to reform the EU is futile; the prospects outside are golden.

"My view is the opposite: our existing EU membership is valuable; we have a great chance to make it better; and all the alternatives are worse."

The UK now accounts for less than 1 per cent of the world's population and less than 3 per cent of global income (GDP). Each year that goes by, these numbers shrink a little. We will find it increasingly hard to get our voice heard on topics that affect our prosperity and well-being if we go it alone.

Of course, there are problems. Just to list a few: the EU's Common Agricultural Policy (CAP) is a waste of money that keeps food prices higher than they would otherwise be; its regional policy splurges money on unnecessary motorways; the EU often meddles in things that are best left to nation states – such as the hours people are permitted to work and how curvy cucumbers are allowed to be; the European Parliament seems like a travelling circus, shuttling back and forth between Brussels and Strasbourg; and EU regulations are sometimes heavy-handed.

There is also a lot that is good within the EU. First and foremost is the single market, which gives British business access to the entire EU with its 500 million consumers. Free trade is one of the most powerful ways of boosting wealth. We would be foolish to compromise our access to this market or would this really happen?

Pros and Cons;

Trade

The EU is a single market in which no tariffs are imposed on imports and exports between member states. "More than 50 per cent of our exports go to EU countries and our membership allows us to have a say over how trading rules are drawn up."

Britain also benefits from trade deals between the EU and other world powers. "The EU is currently negotiating with the US to create the world's biggest free trade area, something that will be highly beneficial to British business." Hence why Obama wants us to stay in!!

Britain risks losing some of that negotiating power by leaving the EU, but it would be free to establish its own trade agreements.

Membership fee

Leaving the EU would result in an immediate cost saving, as the country would no longer contribute to the EU budget. Last year, Britain paid in £13bn, but it also received £4.5bn worth of spending,  "so the UK's net contribution was £8.5bn". That's about 7 per cent of what the Government spends on the NHS each year.

What's harder to determine is whether the financial advantages of EU membership, such as free trade and inward investment (see below) outweigh the upfront costs.

Eurosceptics argue that the vast majority of small and medium sized firms do not trade with the EU but are restricted by a huge regulatory burden imposed from abroad.

Investment

Inward investment is likely to slow in the run-up to the vote, due to the uncertainty of the outcome and its consequences: that's what happened in before the Scottish independence referendum in 2014.

In the longer term, there are diverging views: pro-Europeans think the UK's status as one of the world's biggest financial centres will be diminished if it is no longer seen as a gateway to the EU for the likes of US banks, while Brexit campaigners suggest that, free from EU rules a regulations, Britain could reinvent itself as a Singapore-style supercharged economy.

Fears that car-makers could scale back or even end production in the UK vehicles could no longer be exported tax-free to Europe were underlined by BMW's decision to remind its UK employees at Rolls-Royce and Mini of the "significant benefit" EU membership confers.   This is scare tactics and shouldn't be allowed by corporate companies.

However the UK would then be seen as a safe haven from those risks, attracting investors, boosting the pound and reducing the risk that Scotland would "leave the relative safety of the UK for an increasingly uncertain EU".

Immigration

Under EU law, Britain cannot prevent anyone from another member state coming to live in the country – while Britons benefit from an equivalent right to live and work anywhere else in the EU. The result has been a huge increase in immigration into Britain, particularly from eastern and southern Europe.

According to the Office for National Statistics, there are 942,000 eastern Europeans, Romanians and Bulgarians working in the UK, along with 791,000 western Europeans – and 2.93m workers from outside the EU. China and India are the biggest source of foreign workers in the UK.

Inners say that, while the recent pace of immigration has led to some difficulties with housing and service provision, the net effect has been overwhelmingly positive. By contrast, Farage says immigration should be cut dramatically, and the leaving the EU is the only way to "regain control of our borders". Other pro-Brexit campaigners would not necessarily reduce immigration, but say that it should be up to the British Government to set the rules.

David Cameron says that concessions he won during the renegotiation of Britain's EU membership will reduce immigration as new arrivals will receive a lower rate of child benefit. 

Jobs

This one is very close to my heart and the effect of leaving the EU on British jobs depends on a complex interplay of the factors above: trade, investment and immigration.

Pro-EU campaigners have suggested that three million jobs could be lost if Britain goes it alone. However, while "figures from the early 2000s suggest around three million jobs are linked to trade with the European Union," says Full Fact, "they don't say they are dependent on the UK being an EU member."

If trade and investment fell post-Brexit, then some of these jobs would be lost – but if they rose, then new jobs would be created.

A drop in immigration would, all else being equal, mean more jobs for the people who remained, but labour shortages could also hold back the economy, reducing its potential for growth.

So is Britain heading for the exit? I would say no.  It is always easy for antis to make a case against the EU, but it is harder for them to offer a clearly better option.  For example, since Britain would still want to trade openly and without tariffs with its European partners, it would have to observe most of the EU’s noxious regulations anyway.  I am convinced that this demolishes most arguments for leaving by showing that the alternative is worse.  When the referendum comes, both views should prove extremely interesting.