The UK’s relationship with the European Union (EU) is becoming a hot topic of conversation across Northern Ireland, with a referendum which may well take place in the third quarter of 2016.
While the CBI would never claim there is a uniform business view on this issue, it’s clear that a significant majority of our members, especially in Northern Ireland want to remain in a reformed EU, and there are good reasons to do so.
Firstly, access to the EU Single Market of over 500 million customers has been crucial for the fortunes of hundreds of small and medium-sized firms in Northern Ireland who export or form part of large supply chains worth millions of pounds – for many small companies the Republic of Ireland acts as a great first stepping stone. Some 57% of Northern Ireland’s exports go into EU markets, considerably higher than the 45% for the UK as a whole. And we have a very large and growing agri-food sector in Northern Ireland which has a massive dependency on the EU, in both the supply side and as end markets.
In the EU Single Market where there is one set of rules for 28 different countries, smaller firms find it easier to take that first step to export and break into new markets on our doorstep.
Second, being in the EU also lets us set the trade agenda with our European allies. We could soon be signing the biggest free trade deal ever with the US. We would look to negotiate trade deals on our own if we left the EU, but we’d be doing so with a weaker hand. Through the EU, we currently have free trade deals with 50 countries, with more to come – and many Northern Ireland companies already benefit from this market access. Who knows how long it would take to renegotiate these deals, and how much disruption firms would face as a result, almost certainly costing jobs, and investment.
Third, membership of the Single Market has helped Northern Ireland attract investment from around the world, especially from the US but also from Europe. Per capita Northern Ireland has recently been securing the highest level of inward investment in the UK outside of London, with 25 totally new investors arriving last year alone. With a lower Corporation Tax rate in 2018 we expect Northern Ireland to attract many more, but being part of the Single Market will be a key requirement for many potential investors.
Fourth, being part of the EU Single Market means business can offer customers more products and services, and at lower prices. As well as opening up markets, common EU standards have led directly to safer and more environmentally friendly products, from fridges to medicines.
But the EU isn’t perfect. The European Commission has a strong tendency to regulate, giving a sense of ‘mission creep’. It must improve the process by which it assesses new regulations and reduce this burden, particularly on smaller firms. The signs are that Brussels recognises this and progress is already being made to reduce that impact. The number of new EU initiatives has fallen from 314 in 2010 to just 23 this year. We also need the EU to go further making yet more progress on completing the single market, including services, maintaining momentum on trade deal talks and ensuring that the UK’s EU membership does not become diluted by being outside the Euro.
It’s not about whether we could survive outside the EU, it’s about whether we would thrive.
We’ve looked in detail at the alternatives and, frankly, the arguments don’t stack up. All other possibilities leave us on the outside with far less influence, still following the same rules to trade inside the EU and in some cases still footing the bill. For those pushing for an exit, they need to offer a credible alternative.
The CBI has taken its reform agenda to European capitals for the last few years and there is undoubted appetite for change to tackle the big issues Europe faces. The business case to remain in a reformed EU is clear.