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Staying in a reformed EU still makes sense

Nigel Smyth, regional director, CBI Northern Ireland

Published 09/02/2016

CBI research shows most member companies want to stay in the EU
CBI research shows most member companies want to stay in the EU

Following last week's draft deal on plans to reform the EU, the Prime Minister has called for businesses to speak up ahead of the EU referendum - which is looking more likely to be in the summer.

Businesses do have an important role to play in informing the referendum debate based on what they believe will be best for the country's economy and our long-term prosperity. There are other also issues under consideration, like sovereignty, identity and security.

The CBI will continue to play an active and balanced role in the debate. We speak on behalf of 190,000 firms, together employing around seven million people in the UK. The vote is of course in the hands of the UK public, but based on the biggest consultation and research project in the CBI's 50 years, it's clear that the majority - although not all - of our member companies wish to remain within a reformed EU.

As a contribution to the debate, the CBI's economists have carried out an in-depth review of the most credible academic studies available on the overall impact of EU membership on the UK economy. We judge that the net benefit of membership on the basis of these studies is therefore most likely around 4%-5% of GDP per year, £73bn-£91bn, which works out at around £3,000 per household. That is roughly equivalent to the size of the economies of the North East and Northern Ireland combined.

While the EU certainly has its frustrations for businesses, access to a market of 500 million customers has been crucial to the fortunes of hundreds of small and medium-sized firms in Northern Ireland who export or form part of massive supply chains worth millions of pounds. This customer market will clearly become important for foreign direct investment come 2018, when corporation tax is due to be reduced. Note also, that over 55% of Northern Ireland's exports go into the EU.

Being part of the EU Single Market also means customers have a greater choice of products and services which drives more competitive prices. And EU standards have led directly to safer and more environmentally friendly products.

Those calling for a Brexit must offer a credible explanation of how a new relationship will look and how the UK will not lose out economically. They need to explain how this will benefit the large agri-food sector in Northern Ireland.

Some suggest we have a Norway-style relationship with the EU, but they still pay much into the system but with no control over the rules. And it took Switzerland nine years to renegotiate individual trade deals with the EU, which still don't come close to matching the benefits of being inside the largest trading bloc in the world - both are obliged to still apply freedom of movement rules. The UK could of course compete outside the EU, but would the levels of investment, growth and jobs be the same as we have enjoyed on the inside?

There is much that the EU must do to reform. While progress has been made on the burden of regulation, we want to see more trade deals with the rest of the world and the single market completed.

We want to see the EU doing less where it doesn't add value - lifestyle and employment issues in particular.

The CBI has been across the continent to make the case for these reforms and has found widespread appetite for change. While business will wait to see the details of any final deal, the Prime Minister's ambitions to create a more competitive and outward-looking EU are making clear progress.

Staying in a reformed EU still makes sense

Belfast Telegraph

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