A referendum on Europe? Not right now
The issue of Britain and our relationship with the rest of Europe has come to the fore once again. This is only natural as Europe matters so much to jobs and our prosperity, especially given half our manufacturing exports go to the EU.
The problem is that it is a highly complicated, political issue and impossible to see a homogenous business view. There are, however, at least two certainties, on which business would agree: Firstly, there are clearly things the EU does which we would like to see changed, particularly its tendency to overregulate and bring forward proposals which threaten our competitiveness.
Secondly, business recognises the importance of access to the single market, a major destination for UK exports and a significant factor in attracting inward investment. This is particularly the case in manufacturing, where many companies have used the UK as a base to access European markets.
Our relationship with the EU is a trade-off between the benefits of the single market and other concerns we may have about over-regulation. This brings us to the current debate over a referendum. The on-going Eurozone crisis and clear drive for greater fiscal and political union is adding to the calls for such action. The "have one's cake and eat it" simplistic view of cherry picking those elements of EU membership which are most attractive to the UK is however unhelpful at the present time.
We also do not know which question would be asked. Would a renegotiated agreement be on the table, or would we be asked whether we want to be half in, half out like the Norwegians? Would we go down the Swiss route of simple bi-lateral trade agreements?
The overriding current priority remains the resolution of deficit reduction and promoting growth. In some of the southern peripheral states labour market reform and unemployment also needs to be urgently addressed. The question of a referendum is not today's priority for manufacturing. The UK should instead concentrate on working with our European partners to address the immediate issues which will make a real difference to growth.
Europe remains a very important market for the UK and global competition is a pressing issue for all manufacturing companies across the EU. At a time of great difficulty for the Eurozone and the EU any precipitate political action by the UK to further damage the current structure of the EU would be seen as a betrayal to our partner nations and could lead to long term damage in relations. Yes, the time may come for a sensible and constructive debate on the selective return of aspects of regulation and legislation to the UK but it is not the priority for now.
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