Growth Business spoke to former Business Secretary Vince Cable, and his then-opponent, Chuka Umunna on why it makes business sense to stay in the EU
With research supporting both sides of the EU Referendum, it’s becoming harder to discern fact from fiction. The campaign in support of remaining in the EU has seemingly united ex-Business Secretary Vince Cable and his former opponent, Chuka Umunna, to dispel popular myths vilifying the EU – most notably the notorious amount of regulation.
Speaking in Westminster ahead of the momentous vote, both Cable and Umunna stressed the importance to separating fact from fiction.
“A vote to leave would mean two to three years of uncertainty,” Umunna told GrowthBusiness. “In the longer term, it’ll affect the ability for smaller businesses to export. The numbers speak for themselves.”
A domino effect
Many small companies are part of the supply chain for bigger companies, so if the economy is doing well, small companies will naturally do well. As Cable pointed out, a large part of the argument is how we expect a vote to leave will affect the overall economic climate of the country.
“Most people acknowledge, on both sides of the argument, that if we vote to leave there will be a period of maybe two or three years of chronic uncertainty. We don’t know what the alternative arrangements will be; we don’t know which model any post-Brexit government would choose and we don’t know how the other European Union countries will react and that, in turn, affects the growth of the economy and how business operates,” he said.
Umunna’s biggest concern in the event of a Brexit is the immediate and violent effect it would have on UK businesses looking to export. As a member of the EU, the UK has free trade access to multiple markets. Currently, 28 per cent of the produce on the shelves of our high street stores comes from the EU. That’s £2.2 billion worth of wine imports, £1.4 billion worth of cheese imports and £1.1 billion worth of chocolate imports.
Umunna argued that if we were not in the single market but trading with the EU under World Trade Organisation rules, all of those goods would be subject to tariffs, which smaller businesses would have to pass on to their customers. “There’s a very tangible example even if you are not a small business that exports, how being part of this single market is a benefit to our small businesses. And if you were a small business looking to trade internationally across multiple channels you are able to sell into one big market with a single set of rules, not 28 different sets of standards with which you would have to comply,” he said.
“The different Leave campaigns have conceded the fact that we will not be able to trade in the same way that we do now if we were to leave the European Union.”
EU regulation isn’t the enemy
The former business secretary also addressed what he described as the other argument always brought up in support of a Brexit: the cost of regulation.
Nodding to his five years in parliament addressing small business concerns around stifling EU regulations, Cable emphasised that most of this notorious red tape was actually domestic.
“Many of the regulations that small businesses in particular find irksome tend to be generated at home and I created many of them – shared parental leave, auto-enrolment and so on. This is all good, progressive legislation and it did have a cost for business but it was nothing to do with the European Union.”
For growth businesses
Emphasising further benefits of the single market, Umunna added, “We need to ensure we are providing good support to those fast growth companies that will expand and be able to provide more jobs.
“If we have businesses that are looking to go into the emerging markets, you have to have a domestic, home market within which you can scale up and then build the capacity that enables you to exploit those emerging markets. The single market is that big domestic market of 500 million people. This would be massively reduced to a market of 65 million people if we were to come out of the European Union.”
Speaking exclusively to GrowthBusiness, Umunna argued that staying in the EU would provide growth businesses with greater access to finance. “If we left the European Union, the businesses that can currently take advantage of EU funding will find it hard accessing finance to grow and invest in plant, machinery and R&D. The EU will be lending around a £100 million to UK small to medium-sized businesses between 2015 and 2017 through the European Investment Fund. Our small businesses won’t have access to that and the myriad of other schemes that they can take advantage of,” he said.
“I actually spoke to a business a year ago in Manchester, which is actually using some of the investment schemes that have been made available by Italy’s state-backed investment bank. In terms of finance to grow, being part of the EU puts us in a much better situation than we otherwise would be.”
It’s not an either/or argument
Highlighting a popular argument by the Leave campaigns, Umunna explained that staying in the EU wouldn’t hamper the UK’s ability to trade outside the region. “(The Leave campaigns) like to juxtapose pursuing opportunities in the EU against pursuing opportunities in the rest of the world. That is a completely false choice. It’s not either/or. We should be looking to do both,” Umunna added.
“You don’t dump all your existing customers when you’re pursuing new customers. You seek to keep your current customers satisfied and continuing to place orders while pursuing new opportunities. 44 per cent of our exports are going to the EU. It wouldn’t make sense to say, ‘Oh well, we’ll ignore that 44 per cent because we want to pursue pastures new.’ You want to do both.”
He also touched on the fact that every sitting Commonwealth leader, from India’s Narendra Modi to Canada’s Justin Trudeau, have been clear that they believe Britain is better off in Europe.
“People are really crying out for facts that can stand up to scrutiny and which can help inform business owners when they are making a decision on whether to stay in or not,” he concluded.