"Brexit" from the EU? Majority of UK Manufacturers Want to "Remain"
Much recent press has centred on David Cameron's renegotiation of the UK's EU membership. This comes ahead of the "in-out" referendum, which is to take place by the end of 2017. The Prime Minister claims that he will campaign for the UK to remain in the EU if he secures the reforms he wants. Surveys have indicated that UK manufacturers are overwhelmingly in favour of the UK remaining a part of the EU. Therefore, the outcome of these renegotiations may hold significant implications for the manufacturing sector.
On The Negotiating Table
Many will recall that the Conservatives' election manifesto and its promise to hold a referendum on whether or not the UK should exit the EU (popularly known as "Brexit") by the end of 2017. In this referendum, Downing Street and MPs have opted for the following question to be put forward to the nation: "Should the United Kingdom remain a member of the European Union or leave the European Union?"
On 2 February 2016, a key development came when the European Council published a draft blueprint for the proposed changes to the UK's EU membership. In a summit of EU leaders, which is scheduled for 18-19 February 2016, the Prime Minister hopes to secure an agreement for his proposed renegotiation. David Cameron has acknowledged that the outcome of these renegotiations is likely to influence his campaign for "Brexit".
It is reported that, as part of the renegotiation, the Conservatives want to:
- "Free business from red tape" and "excessive interference" from Brussels; and
- Provide access to new markets through "turbo charging" free trade deals with America and Asia.
The two-day summit will mark another significant moment in the "Brexit" debate – the Prime Minister requires the approval of all 28 EU members for a draft package of reforms to the UK's membership. If he secures it, an early "in-out" referendum on the "Brexit" could be on the cards for this year, as early as June.
Understanding the Implications of "Brexit"
In terms of implications for trade, if the UK stays "in", it avoids exporter tariffs and red tape – this is important as 45% of the UK's exports go to the EU. As a member, the UK can obtain better trade terms because of the EU's size. On the other hand, if the UK votes "out", it will negotiate a new EU relationship without being bound by EU law. Moreover, it would be able to secure trade deals with other countries, unilaterally including China, India and America.
Large businesses (subject to a few exceptions) tend to favour the UK staying in the EU - this is because it makes it easier for businesses to move money, people and products around the world. EEF, the manufacturers' organisation representing over 6,000 companies, found that 85% of its poll voters would vote to stay in the EU (with only 7% opting to leave). Notably, firms with more than 250 employees were most keen on remaining in the EU, with 90% of those poll voters stating that they would want to retain membership.
Terry Scuoler, the Chief Executive of EEF, commented on the poll's results with the following: "Despite the continued problems in the Eurozone, manufacturers remain overwhelmingly of the view that our economic wellbeing is inextricably linked to the EU and, we must stay in as members".
These renegotiations come at a time where manufacturing companies in both the UK and the wider EU have been suffering. For instance, the manufacturing sector failed to contribute to UK economic growth in 2015. The Office for National Statistics ("ONS") has recently stated that manufacturing output fell 0.2% in December 2015 for the third month in a row. Therefore, the outcome of David Cameron's renegotiations and the impending "Brexit" referendum could hold implications for the recovery of the manufacturing sector and may present opportunities. We will be keeping our fingers on the pulse and updating you with the latest developments arising from the renegotiations.