One of the key issues gripping of politicians and businessmen alike at the moment is the upcoming referendum on British membership of the European Union (EU). Given that it is widely expected that the government will hold the EU referendum on or around the 23rd of June, it is important to understand the basic arguments on either side. Even if you don’t fall in line exactly with one political party, this a referendum independent (in theory) of party politics so it is even more important to study the individual points made by each side, to allow you to understand the implications of leaving, or remaining, a member of the EU.
One of the first points to make, is the massive amount of uncertainty that even the mere possibility of the referendum has generated. This unpredictability has hurt the UK stock market according to various analysts, and until the outcome is actually set in stone, the effects of uncertainty will continue. It is predicted that inward investment will slow before the vote, and pro-European’s believe this will continue if the UK leaves. They would argue that the UK’s position as a figurehead for financial services would be under threat if the “out” vote won, since it would no longer be seen as the best point of access to the single-market for US banks and others. It is predicted this would hit London hardest.
Another view however, is that the shock of one of the EU’s largest economies leaving the single-market would hit the unions finances, and open a proverbial “Pandora’s Box” of increased populist anti-EU sentiment in other countries. The UK would then be viewed as a safe haven from those attempting to scramble from the failing European project, boosting the pound, and reducing separatist support in Scotland. This is because Scotland would see the value in remaining in Britain, rather than an uncertain Euro.
Widely considered one of the largest benefits of EU membership is free trade between member states as part of a unified free market. This is naturally one of the key arguments for remaining members then, as it makes it a lot easier for businesses to trade with emerging, or already established, foreign markets, since they do not have to rely on independently negotiated deals with each country they wish to trade with. The counter argument to this, is that the UK would be able to negotiate it’s own trade agreements with markets outside of Europe (such as India), agreements that the EU has not managed well thus far. UKIP leader Nigel Farage therefore advocates the UK following the example of Norway. Norway have access to the single market, but are not in a position where they are bound by EU regulations and laws in areas such as agriculture. Although this may seem ideal, many (including the Economist) believe such an amicable separation would not be possible, and that in fact (according to think tank Open Europe) the UK would stand to lose 2.2% of it’s GDP by 2030 if a “brexit” occurred.
EU: The Job Market
Current laws in the EU make it easy for British workers to travel abroad and work, as well as fairly easy for UK based businesses to employ people from other member states. Of course you have to look to UKIP’s Nigel Farage here, who claims this freedom of employment constitutes a restriction on the UK from “managing it’s own borders”. However, the flip side argument is that the “best and brightest” from other countries will be deterred from working in the UK due to the potentially laborious bureaucratic and restrictive loopholes that it would require. This harms employers as it reduces their potential candidates.
Obviously, being a part of the EU increases friendship between Britain and fellow member states. If Britain were to leave, it is expected that military influence would decrease, and consequently Britain’s utility to America would decrease, and Obama would consider Britain a less useful ally. If you were to consider the positives of an exit, Britain could reclaim territorial fishing waters, scrap limits on the amount of hours people can work each week, free itself from the EU’s renewable energy regulations and create a freer economic. This appears confusing as it contrasts with earlier points made (indeed the Economist here suggests an exit would be beneficial to London) but it just shows how what can have a positive effect for Britain in one area, can harm it in another. Despite these specific benefits, the general feeling is that if Britain were to exit the union, it would be left as an outsider, with a considerably smaller degree of influence than it currently has, and almost no way of re-entering what it has left.
So, that covers a number of the areas (as impartially as a possibly can, but apologies if you feel I have not managed this!) but obviously there are many more since the EU is such a massive governing organisation. If there is an issue that is of specific importance for you, for example Recycling, I strongly encourage you to Google this, and find out how the EU affects that issue and what policies they follow.
That should help you make your mind up, but what about the businesses in the UK and elsewhere? Most business leaders in Britain are thought to be firmly in favour of remaining a member of the EU, but a lot of the early rhetoric has been from Business for Britain, an anti-EU group. If this interests you, considering visiting their website, and looking at who supports them and why. Small business owners and entrepreneurs appear to be growing in support of continued membership. A Financial Times survey earlier this year found that 63% of 3,800 businesses in the UK felt that leaving the EU would have a negative impact, and this is reciprocated in executives from across Europe, where two-thirds out of 2,600 said that they believe a Brexit would be a negative thing.
Phew! That’s pretty much everything, and I am well aware this is a longer post than normal, but the aim was to provide a grounding in what is a massively complicated topic. Hopefully you have had your interest piqued (if you even made it all the way down here!) and now either have an idea of how you would like to vote, or what else you would like to know. Thanks, as always, for reading!