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Factsheet 2 - Benefits of EU membership outweigh costs

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  • 71% of CBI member businesses report that the UK’s membership of the EU has had an overall positive impact on their business, including 67% of SME members. Only 13% said there had been a negative impact. Overall,78% said they would vote to remain in the EU in a referendum, with 77% of SME’s taking the same position.
  • A CBI literature review suggests that the net benefit of EU membership to the UK could be in the region of 4-5% of GDP or £62bn-£78bn a year – roughly the economies of the North East and Northern Ireland taken together.

Access to a $16.6 trillion a year Single Market of 500m people is the key benefit

  • UK firms’ access to the Single Market goes beyond a standard free-trade agreement - the EU has eliminated tariff barriers and customs procedures within its borders, and has taken strides towards removing non-tariff barriers - such as different product regulations - by enforcing EU-wide competition law and coordinating product regulations.
  • 76% of CBI members say that the ability to freely buy and sell products in the EU has had a positive impact on their business, including 74% of SMEs.
  • It has been estimated that UK trade with some countries in Europe could have increased by as much as 50% as a result of EU membership.
  • The Single Market also underpins access to European supply chains. In 2009 $207bn of the UK’s total of $293bn of exports to the rest of the EU27 was used as inputs to industries, rather than being consumed directly; and the UK imported $161bn of intermediates from the EU27 in 2009. Imported intermediates are important even to domestically-focused sectors: the health & social care sector used $19bn of imported intermediates (principally of pharmaceuticals and other chemicals).

The EU has helped open global markets to UK firms on strong terms

  • The EU is a springboard for trade with the rest of the world through its global clout: it accounted for 23% of the global economy in 2012 in dollar terms. Through 30 trade deals negotiated by the EU, including the Single Market itself, British firms have full access to a $24 trillion market. The recent deal with Canada and on-going discussions with Japan and the US could double this to $47 trillion - the UK would struggle to achieve the same quality of trade deals independently.
  • 58% of CBI members think that extra-EU trade agreements have had a positive impact on their business, including 55% of SMEs, compared to 3% who thought the impact was negative.

Membership has increased flows of investment into the UK

  • Investment flows across borders inside the EU have roughly doubled following the introduction of the Single Market. As the EU’s leading investment destination, the UK was a key beneficiary: the EU accounted for 47% of the UK’s stock of inward FDI at the end of 2011, with investments worth over $1.2 trillion.
  • Access to the EU Single Market has also helped attract investment into the UK from outside the EU.
  • 52% of CBI members say that the ability to invest in other EU states without restriction has had a positive impact on business.

Free movement of labour has broug­­­­ht benefits to the UK economy

  • Free movement of labour helps UK business plug skills gaps. 63% of CBI members say that the ability to recruit and transfer staff from across the EU has been positive for business, including 48% of SMEs. Overall only 1% of members said the impact had been negative – and only 2% of SMEs said it had been negative.
  • UK citizens have also benefited from free movement of labour – at least three-quarters of a million live in other EU countries.
  • CBI recognises that there is public debate over immigration – consideration must be given to how free movement can practically operate in an EU of 28 in a way that commands public support.

Business sees the UK’s lack of unilateral control over some regulation as a downside to membership

  • There is recognition that common rules are needed to support the Single Market. 52% of CBI members think that common product standards across the EU are a positive, including 50% of SMEs. Overall, only 15% of members said that the impact of common standards had been negative.
  • However, firms are concerned about labour market regulation. 49% of CBI members say that the pan-EU employment rights in areas such as working hours are a negative for business.

The UK’s net budgetary contribution is a small net cost relative to the benefits

  • The UK’s net contribution to the EU budget is around €7.3bn, or 0.4% of GDP. As a comparison that’s around a quarter of what the UK spends on the Department for Business, Innovation and Skills, and less than an eighth of the UK’s defence spend.  The £116 per person net contribution is less than that from Sweden, Denmark, Finland, Germany and the Netherlands.

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