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IoD calls on all parties to accept need for EU reform

29 Sep 2015

The referendum on the UK’s membership of the European Union will be the biggest political event of the next five years. With politicians and the public split on the issue, British business will be a prominent voice in the debate. The Institute of Directors today [Monday] publishes the most comprehensive study to date of what its members think about the EU, and why.

Simon Walker, Director General of the Institute of Directors, lays out the IoD’s position:

“The result of the EU referendum hangs in the balance. There is division within both major parties on the UK’s future role in Europe. In this tense atmosphere, the most important question that must be considered is what effect staying, or leaving, would have on the economy. 

“On balance, IoD members think the benefits of staying in the EU outweigh the negatives, but half have not yet decided how they will vote. Europe is currently struggling to deal with the many challenges it faces. The refugee crisis and the uncertainty over Greece’s future may be the immediate issues dominating the discussions of EU leaders, but the underlying problem is a lack of economic competitiveness.

“It is vital that politicians here and across the continent move away from a rigid Europe which seeks to micro-manage the economies of member states. In particular, we are calling on the Labour party to acknowledge that maintaining the status quo is not good enough. Individual states have different economies and working practices. No matter how well-intentioned, employment regulation and business red tape imposed in a blanket fashion make it unnecessarily hard for businesses across Europe to operate.

“We urge Jeremy Corbyn, and his shadow business secretary Angela Eagle, to recognise the appetite across many members of the EU to drive through reforms to make their economies more competitive and increase growth. This is an opportunity to make Europe work better for all of its citizens. The alternative is economic stagnation and greater dissatisfaction with the institutions of the European Union.    

“Where IoD members do want Brussels to lead is on issues that are genuinely best dealt with at the EU level, particularly TTIP, the EU-US trade deal that could create so much benefit for businesses and consumers.”

A survey of 1,259 IoD members, who lead businesses of every size, from every sector and operating in every part of the United Kingdom, conducted between 23rd April and 7th May 2015, found that: 

  • Two-thirds (65%) of IoD members agree with the statement “from my organisation’s perspective, the benefits of the UK remaining a full member of the EU outweigh the negatives”.
  • But only 13% think that the EU currently has a viable socio-economic model.
  • Half (51%) say the way they vote in the referendum will depend on what reforms David Cameron is able to achieve, with 40% intending to vote to remain under all circumstances, and 7% saying they will definitely vote to leave.
  • Businesses want Europe to focus more on securing trade deals and stay away from social and employment law, with over half (51%) saying that EU interventions on these areas were “unhelpful.”
  • Cuts to red tape, an amendment to the principle of “ever closer union” and measures to make the EU economy work better are the reform priorities for IoD members.
  • Six in ten (61%) IoD members say that the referendum on Britain’s membership of the European Union will create uncertainty for their business, but a slim majority (51%) still back the prime minister’s decision to hold the referendum.

Spelling out the IoD’s priorities for reform, Allie Renison, Head of Europe and Trade Policy at the IoD said:

“Europe is at its best when it is promoting policies for growth, helping businesses create jobs and boosting trade within Europe’s borders and beyond. IoD members are clear that the EU’s current model isn’t working, and the bloc as a whole needs to be reformed to make it more competitive. Securing TTIP, serious enforcement of the Single Market and further liberalisation of services must be the priorities over the coming years.

“However, there are concerns over Europe’s tendency to intervene on areas like employment law and social affairs. The needs of businesses and employees differ from region to region, let alone across a political union of twenty eight members, 500 million people, eleven currencies, and more than twenty languages. Decisions in these areas should, as far as possible, be made by national parliaments.

“Recent European interventions, such as the court rulings on the inclusion of overtime in employees’ holiday pay, and on working hours for mobile employees, threaten to hit small and medium-size businesses in particular. It is a worrying development that the main source of new European labour law now seems to be the EU court. Businesses need certainty that rules will not be changed halfway through game.”

Read the full report, including analysis of businesses’ relationship with the EU and the areas that need reform, here.

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