Peter McManus is a CBI Senior Campaigns Adviser. @PeteMcManus1
As Chris Carter kindly stated on ConservativeHome last week, the CBI is “the UK’s premier business lobbying organisation”.
We represent 190,000 businesses, of all sizes and sectors, through a network of 140 trade associations and a number of direct members employing, between them, seven million people – a third of the private sector workforce.
Our recent report – Choosing Our Future – is a refreshed version of the single biggest member consultation and economic analysis we have undertaken in our 50 years of existence.
The report details the benefits of EU membership for business, the downsides of possible alternative arrangements and – perhaps overlooked – the reforms of the European Union which CBI members would like to see to make the EU more open, competitive and outward looking.
The CBI’s engagement with Governments – in Brussels, Washington, Westminster and beyond – is as a collective voice for employers. We don’t lobby for individual businesses; rather we promote conditions in which businesses of all sizes and sectors in the UK can prosper.
For example, we have helped to secure relief from high energy prices for energy intensive industries, including the under-pressure steel industry. We also continue to push the government to do more through a long-term industrial strategy, guarding against excess market supply and removing plant and machinery from business rates calculations.
The UK’s membership of the European Union has a significant bearing on the conditions Britain’s businesses operate under, and when discussing the effects on businesses, it is important to remember that easy access to the EU single market is particularly beneficial for small firms.
Our experience supporting expanding businesses suggests that fast-growing small businesses looking to export for the first time often begin with EU countries. With only one set of rules to comply with in order to trade with 500 million customers in 28 countries, small businesses, without the capacity to comply with multiple sets of rules, stand to gain the most.
Just as the UK is regarded by inward investors as a ‘springboard to Europe’, many small businesses consider the European Union to be a springboard to exporting to the rest of the world.
Britain’s influence in the European Union has had a significant impact, by introducing positive regulation to expand the common market to improve the environment for small businesses. It has also had an important role in reducing problematic regulation that can be damaging to small businesses.
The Government’s Cut Red Tape board has reported good progress from the European Union, withdrawing some proposals and amending others to the benefit of hundreds of thousands of SMEs.
Small businesses who do not export themselves also benefit from EU membership as part of pan-European supply chains. It is essential to appreciate the inter-connected nature of modern supply chains, rather than consider those businesses which directly export in isolation.
There are, for example, 2,049 automotive suppliers in the UK. Many of these are SMEs, like those in our publication. These companies supply component parts of the final product, which are often assembled by UK-based businesses that directlyexport to the European Union. Those exports accounted for 16 per cent of GDP in 2012.
Big exporting businesses like Ford and BMW employ tens of thousands of staff themselves in the UK, but 78,000 more are supported through these smaller supply businesses. The benefits of EU membership are clearly not constrained to larger firms which directly export.
Access through the EU to skills that businesses need can also be particularly beneficial for SMEs, for whom the visa process can be prohibitively expensive and difficult. Skilled workers from the EU plug gaps in the UK labour market, removing barriers to growth and enabling further employment of UK staff.
It goes without saying that improving the UK skills base is vital, and the CBI is working with government to do so, but easy access to skills we lack is likely to be important over the coming years.
Even those small businesses not in export supply chains still benefit from EU membership through an improved business “ecosystem”. From businesses providing services like accounting or graphic design down to independent retailers like newsagents, hairdressers and pet shops – all benefit from Britain’s economy being more prosperous as a result of EU membership.
The impact of increased FDI, lower costs of imports and a more competitive Britain in the world combine to build a better environment for growth that supports all UK businesses, big or small.
Should the British electorate vote to leave, and the UK withdraw its MEPs, Council Ministers and Commissioners, the CBI’s presence in Brussels would become even more important.
British businesses operating in and trading with other EU countries will have to abide by EU regulation in order to trade. The CBI’s voice in promoting an environment which benefits all British businesses would become even more essential if the UK government no longer had formal representation on Brussels’ legislative bodies.
The businesses of all sizes featured in our pamphlet can identify specific benefits of EU membership for them. But the EU is far from perfect and there are many ways it can be better for business.
We have made progress towards achieving reform on a variety of fronts over the last year to build on the existing benefits of membership.
The CBI has set out a future for the UK in the European Union that would see us stronger economically, more secure and more competitive in a rapidly changing world. The challenge for those advocating withdrawal is to clearly lay out a plan for Britain’s future outside of the European Union.