With the debate on the EU referendum heating up, CBI campaigns director Andy Bagnall explains why, on balance, business can be pleased with the deal
Last month, the prime minister emerged from a marathon negotiating session with his European counterparts proclaiming a deal had been reached giving the UK “special status” in the EU.
While the deal received a mixed reaction at home, and different groups will make their own assessments based on a variety of criteria, there were some clear concrete reforms which will benefit British and European businesses.
At the top of the list for us are reforms to make the EU more competitive - something the CBI has been actively campaigning for across Europe over a number of years.
The prime minister’s biggest achievement here is getting EU leaders to agree a specific target to cut the burden of regulation for the very first time. This is a major win for business and builds on progress that the EU has already made, such as scaling back the number of annual proposals from an average of over 100 to just 23 in each of the last two years.
There have also been improvements in the process of assessing rules through a new Regulatory Scrutiny Board. Of course there will always be more work to do, but it seems as if we are on the right track in terms of the EU institutions reaching for the regulatory lever as a last resort rather than a first response.
In parallel with efforts to cut regulation, the prime minister has also accelerated progress on opening up markets both within and outside the EU.
Leaders have committed to “breathe new life” into the Single Market, the biggest benefit CBI members see from EU membership. In particular, the EU has committed to creating a Digital Single Market and bringing in a “services passport”, an initiative which should help UK services companies operate in other EU countries with much less local red tape.
Beyond Europe’s borders, the EU has agreed four new trade deals in the past year with Canada, Vietnam, Singapore and Ecuador. Trade negotiations are also progressing with many more countries including the US and Japan. If all deals in the EU’s pipeline were concluded, 88 per cent of UK exports would be covered by free trade deals. The prime minister has secured explicit agreement from his counterparts that getting these deals over the line will be a priority for the EU.
From our very first consultations with CBI members on what is good and bad about EU membership back in early 2013, businesses have told us that they are nervous about the UK having its place in the wider Single Market undermined by further integration in the eurozone.
Many of our members will therefore be comforted that the EU has explicitly recognised that UK businesses, including our financial services sector, will not be discriminated against on the basis of using the pound. The prime minister has negotiated a specific “emergency brake” mechanism to underpin the principle, enabling the UK to bring any measures it sees as discriminatory to the European Council, the EU’s top table. The UK will also not be on the hook for any future eurozone bail-out.
Of course, business recognises that there are other areas of the prime minister’s deal which are perhaps less business facing but important in the public debate. Reforms to limit benefit payments to EU migrants and exempting the UK from “ever closer union” have taken up many column inches on the deal and will, no doubt, continue to do so.
People will judge the EU on a variety of issues, but from the perspective of what is best for the UK’s prosperity, this deal adds value.
While we now have a clearer idea of what a reformed EU looks like for the purposes of the referendum, reforms don’t stop here for the CBI. If the UK votes to stay in the EU we’ll need to build on what the prime minister achieved, cementing the EU as an organisation which has jobs and growth as its raison d'être. We’ll also work to make sure the EU gets the details right as it translates some of these positive principles into reality.
Overall, business can be satisfied that the EU is a good deal better as a result of the reforms. But while reform must continue, the question now moves on to whether the UK’s future is best served by remaining in the EU, or by leaving.
Before the prime minister’s deal, the majority but not all CBI members consistently told us they want to remain in a reformed EU.
Next post: A dose of confidence is good for business
Previous post: Celebrating the positive impact of apprenticeships