Uncertainty over Britain's future in Europe could prove a serious disincentive to investment in Britain, say business leaders
Some of Britain's most respected senior business leaders – including Lord Browne, a former boss of BP, now the most senior non-executive appointed by the coalition in Whitehall – have warned that years of uncertainty about whether the UK will remain part of the European Union will put off investors, leading major companies to put big job-creating projects elsewhere in Europe.
After months of silence or only private interventions, executives and the heads of some of the country's biggest business lobby groups have spoken to the Guardian about David Cameron's stance on holding a European referendum beyond the next election in 2015.
Lord Browne, who is influential in the Treasury, said: "Those looking to invest in Britain will find world-class higher education, internationally renowned R&D and a revered legal and regulatory environment. But it is easy to forget that we are also viewed by many as a gateway to the European Union. Uncertainty is the enemy of investment, and we should be wary of doing anything which tarnishes Britain's reputation as a home of choice for human and financial capital."
Anticipation that the prime minister would announce that a future Conservative government would renegotiate Britain's European treaty and put it to a popular vote was confirmed in press reports, despite the speech itself being cancelled as Cameron turned his attention to the Algeria hostage crisis.
Some business leaders had welcomed Cameron's stance but others warned of a "chill factor" for foreign investors, of "dangerous" impacts on their business, and the risk of "total destabilisation" of the UK economy. Several business leaders said the chief threat to the UK – the No 1 overseas investment spot in the EU – was five years of uncertainty caused by a pending referendum.
Sir Andrew Cahn, vice-chairman of the Japanese investment bank Nomura![ext]()
, spelt out how potential investors might react: "Imagine you are the CEO of a Korean car manufacturer, or a Japanese electronics firm, or an American pharmaceutical company, or a Chinese bank. You have a billion dollar investment to make in Europe and the UK is your favoured location, as it would be half the time.
"Now your advisers say: we do not know if the UK will be in the single market in five years' time and have no idea what their access terms will be. We do not know if the UK will find a sustainable relationship with the EU or be endlessly fractious. Indeed, we have no idea what Britain's EU strategy is. As CEO, you are still tempted by Britain, but the balance changes and you examine the European alternatives more closely.
"Whatever David Cameron says in his speech [now cancelled], much inward investment will still come here. But the chill factor is there, the nagging worry that the UK is retreating into inconsequential isolation. Why risk it?"
Martin Sorrell, chief executive of the global advertising and PR giant WPP![ext]()
, said: "At the very best it [a referendum] will be neutral in impact; at the worst, negative on FDI [foreign direct investment]."
These reactions were echoed by other key business figures who began speaking out on Thursday. ITV news reported![ext]()
that Sir Roger Carr, the Centrica ![ext]()
chairman who is also chairman of the Confederation of British Industry![ext]()
, had told reporters that a stark in/out referendum on the EU would risk "total destabilisation" of the British economy.
Wolfgang Schreiber, chief executive of German-owned Bentley motors![ext]()
, told the Press Association: "It's acceptable for Britain to keep the pound while the continent has the euro. But quitting the EU could be dangerous for Bentley."
Some voices, however, welcomed taking a tough approach to negotiating a new deal in Europe. JD Wetherspoon![ext]()
's chairman, Tim Martin, said the Europe-wide pub chain wanted "proper democracy" in EU countries, where accountable local politicians make laws. "The idea that we are in trouble if we repatriate democratic powers is piffle," Martin said. "Let's restore full democracy in Britain and be great friends with prosperous European countries, with whom we have a lot in common."
And the British Chambers of Commerce said a referendum was essential to strengthen the UK's hand in the negotiations which many want to see result in a repatriatation of powers. "We have to be prepared to walk away from the table … otherwise you're lost," said John Longworth, the chambers' director-general. Reported by guardian.co.uk 21 hours ago.
Some of Britain's most respected senior business leaders – including Lord Browne, a former boss of BP, now the most senior non-executive appointed by the coalition in Whitehall – have warned that years of uncertainty about whether the UK will remain part of the European Union will put off investors, leading major companies to put big job-creating projects elsewhere in Europe.
After months of silence or only private interventions, executives and the heads of some of the country's biggest business lobby groups have spoken to the Guardian about David Cameron's stance on holding a European referendum beyond the next election in 2015.
Lord Browne, who is influential in the Treasury, said: "Those looking to invest in Britain will find world-class higher education, internationally renowned R&D and a revered legal and regulatory environment. But it is easy to forget that we are also viewed by many as a gateway to the European Union. Uncertainty is the enemy of investment, and we should be wary of doing anything which tarnishes Britain's reputation as a home of choice for human and financial capital."
Anticipation that the prime minister would announce that a future Conservative government would renegotiate Britain's European treaty and put it to a popular vote was confirmed in press reports, despite the speech itself being cancelled as Cameron turned his attention to the Algeria hostage crisis.
Some business leaders had welcomed Cameron's stance but others warned of a "chill factor" for foreign investors, of "dangerous" impacts on their business, and the risk of "total destabilisation" of the UK economy. Several business leaders said the chief threat to the UK – the No 1 overseas investment spot in the EU – was five years of uncertainty caused by a pending referendum.
Sir Andrew Cahn, vice-chairman of the Japanese investment bank Nomura
, spelt out how potential investors might react: "Imagine you are the CEO of a Korean car manufacturer, or a Japanese electronics firm, or an American pharmaceutical company, or a Chinese bank. You have a billion dollar investment to make in Europe and the UK is your favoured location, as it would be half the time."Now your advisers say: we do not know if the UK will be in the single market in five years' time and have no idea what their access terms will be. We do not know if the UK will find a sustainable relationship with the EU or be endlessly fractious. Indeed, we have no idea what Britain's EU strategy is. As CEO, you are still tempted by Britain, but the balance changes and you examine the European alternatives more closely.
"Whatever David Cameron says in his speech [now cancelled], much inward investment will still come here. But the chill factor is there, the nagging worry that the UK is retreating into inconsequential isolation. Why risk it?"
Martin Sorrell, chief executive of the global advertising and PR giant WPP
, said: "At the very best it [a referendum] will be neutral in impact; at the worst, negative on FDI [foreign direct investment]."These reactions were echoed by other key business figures who began speaking out on Thursday. ITV news reported
that Sir Roger Carr, the Centrica chairman who is also chairman of the Confederation of British Industry, had told reporters that a stark in/out referendum on the EU would risk "total destabilisation" of the British economy.Wolfgang Schreiber, chief executive of German-owned Bentley motors
, told the Press Association: "It's acceptable for Britain to keep the pound while the continent has the euro. But quitting the EU could be dangerous for Bentley."Some voices, however, welcomed taking a tough approach to negotiating a new deal in Europe. JD Wetherspoon
's chairman, Tim Martin, said the Europe-wide pub chain wanted "proper democracy" in EU countries, where accountable local politicians make laws. "The idea that we are in trouble if we repatriate democratic powers is piffle," Martin said. "Let's restore full democracy in Britain and be great friends with prosperous European countries, with whom we have a lot in common."And the British Chambers of Commerce said a referendum was essential to strengthen the UK's hand in the negotiations which many want to see result in a repatriatation of powers. "We have to be prepared to walk away from the table … otherwise you're lost," said John Longworth, the chambers' director-general. Reported by guardian.co.uk 21 hours ago.