8 out of 10 firms say UK must stay in EU

If a referendum on the future membership of the European Union was held tomorrow, a substantial majority of CBI members would support staying in, fearing an exit would affect access to trading markets and business investment, leaving the UK less competitive. That’s according to a new snapshot CBI/YouGov survey .

Firms also identify several priorities for reform

The survey of more than 400 businesses employing more than 1.5 million direct employees, shows 78% of firms favour staying in the EU, including 77% of small and medium-sized enterprises (SMEs). Just 10% think it is in their interests for the UK to leave the EU (11% of SMEs). Despite frustrations over the current relationship, and the burden of some regulations, particularly employment law, the survey shows most businesses feel the positives more than outweigh the negatives.

But firms do want to see the relationship reformed. Businesses are calling for a reduction in unnecessary regulations, rules to be implemented evenly across all member states and an end to the ‘gold-plating’ of EU legislation.

John Cridland, CBI Director-General, said:

‘This sends a clear message that most CBI members, big and small, support UK membership of the EU.

‘Firms want what is best for jobs and growth, and there is genuine concern that an exit would hit business investment and access to the world’s largest trading bloc.

‘The UK should take the lead on the push for reform and make sure rules are evenly applied across the EU. Businesses are also concerned about the UK gold-plating legislation from Brussels.

‘Businesses do have some serious concerns about the EU, but ultimately they want the UK inside the tent winning the argument for reform.’

Among the survey’s key findings:

• 71% said the UK’s membership has had a positive or very positive impact on their businesses, with 16% stating it had no impact and 13% that the impact was negative
• Among the SMEs surveyed, 67% think membership of the EU has had a positive impact (16% no impact, 16% negative)
• When asked to rank their priorities for reform, 46% wanted an end to ‘gold-plating’ of EU legislation and 39% wanted to see EU rules applied evenly across all member states. Other priorities for reform include reducing regulation (39%) and making structural reforms for a more competitive EU (36%)
• 75% think leaving the EU would have a negative impact on the overall level of foreign direct investment in the UK – 9% thought it would increase investment. 35% warned they would be likely to reduce their own business investment in the event of an EU exit, compared to 51% saying there would be no impact and only 6% who stated they would boost investment
• 86% believe that leaving the EU would have a negative impact on UK firms’ access to EU markets (11% thought it would have no impact and only 1% a positive impact)
• 59% thought that an EU exit would reduce the international competitiveness of the UK as a whole, with 15% believing the UK would be unaffected and 23% that there would be a positive impact.

The survey shows a majority of companies see the EU as having a positive impact on their businesses, in terms of their ability to buy and sell products inside and outside EU markets without prohibitive taxes or tariffs, and to recruit staff from across the EU.

However, firms are concerned by the potential impact an EU exit would have on their businesses and the UK as a whole. Some benefits to leaving were identified, such as a reduced regulatory burden. A significant minority of firms felt that an EU exit would have no impact on them, but very few pointed to positive benefits. A bigger proportion said that the UK leaving would have a negative impact judged against most criteria, including the UK’s international competitiveness, its ability to participate in EU supply chains and access to EU markets.

On the impact to business of our current EU membership, the survey found:

Significant numbers of firms believe the current relationship has a positive impact on their own businesses which includes:

• The ability to buy and sell products without taxes and tariffs on trade flows in EU markets (76% positive, 17% no impact, 1% negative) and outside EU markets as a result of trade deals (58% positive, 30% no impact, 2% negative)
• To recruit and transfer staff from across the EU (63% positive, 28% no impact, 1% negative), although large firms (73%) were stronger advocates than SMEs (48%)
• Common product standards across the EU (52% positive, 27% no impact, 15% negative)

But there have been some areas where there has been a negative impact on their own businesses, including:

• Attempts to create similar employment law across the EU, in areas such as working hours, was the one aspect where a higher proportion felt there had been a negative impact (49% negative, 25% no impact, 22% positive).

On major concerns about the negative impact of an EU exit on their own businesses:

• On employment levels (42% negative, 49% no impact, 5% positive)
• Access to trade in EU markets (67% negative, 25% no impact, 3% positive)
• Overall business competitiveness (55% negative, 27% no impact, 15% positive)
• Access to skilled workers (47% negative, 46% no impact, 3% positive)
• On their ability to attract foreign direct investment from outside the EU (32% negative, 46% no impact, 5% positive) and from the EU itself (42% negative, 40% no impact, 2% positive)
• But many firms do recognise benefits from an exit reflecting areas of the relationship they would like to reform. 52% said they would expect the overall regulatory burden to lessen (23% saying it would make no difference and 20% saying the position would worsen).

On the UK’s influence in the EU:

• Businesses believe the UK does currently have influence on EU policies that affect them (72% significant or some influence, 27% not very much or no influence) and expect this to remain the case in the future (74% significant or some influence, 25% not very much or no influence)
• But if the UK left the EU firms felt there would be a negative impact on its influence (65% negative, 16% no impact, 15% positive).

Read the full survey results here