The UKs 40 year relationship with the EU is under scrutiny. In June this year the UK will vote on whether to remain part of the EU. This referendum could greatly affect UK businesses and the economy.
As pressure on the Prime Minister to negotiate better terms continues to increase, and with a referendum due to take place on 23rd June of this year, the potential effect on businesses remains unclear.
Free Trade- Leaving the EU would unbind the UK from their laws, enabling the UK to freely establish trade agreements with non-EU countries. As explained on the Telegraph, “Britain’s links with the EU are holding back its focus on emerging markets – there is no major trade deal with China or India, for example.”
Self Sufficiency- The UK could become a self-sufficient and independent country, as Lord Bamford, the chairman of JCB, explained on the Independent.co.uk, “We are the fifth or sixth largest economy in the world. We could exist on our own – peacefully and sensibly.”
Improved Skills- Businesses would be forced to invest in training to nurture home-grown talent opening up opportunities for UK residents and potentially enhancing the economy.
Strengthened Influence- As part of the EU the UKs voice is combined with 28 other nations. Leaving the EU would give the UK back its voice.
Limited Trade- As a member of the EU it’s easier and cheaper for the UK to trade with other EU nations, since trade agreements and regulations are already in place. Staying in the EU is beneficial from both a compliance perspective, as well as financial, as Roopa Aitken explained on Grant-Thornton.co.uk. Further to this, and as explained by Business expert Rachel Bridge on the Telegraph.co.uk, “At present the EU is the UK’s main trading partner, with trade worth more than £400bn…” Therefore, it is no surprise losing 50% of its trade would gravely affect UK businesses and the economy.
Reduced Investment- Studies have shown significant foreign investment flowing into the UK as a result of its EU membership, with large countries such as the US, China, India and Japan seeing the UK as a way into the EU. Leaving the EU could force business investment and production to shift away from the UK towards the EU.
Access to Skills- As an EU member, it’s fairly easy for UK companies to employ workers from other EU countries. Brexit would stop this, limiting access to vital skills. Professor Adrian Favell states on TheWeek.co.uk, that limiting this freedom would deter the “brightest and the best” of the continent from coming to Britain, create complex new immigration controls and reduce the pool of candidates employers can choose from.
As summarised by The Economist, leaving the EU would result in Britain still being subject to the politics and economics of Europe, but it would no longer have a seat at the table to try to influence matters.