Business leaders and entrepreneurs across Northern Europe add weight to EU reform agenda

When a group of business people who, amongst them, have helped to lead companies that employ around one million people, say something, it's a good idea to listen.

In an unprecedented joint initiative, leading business men and women from across Northern Europe used a letter to the Sunday Times and op-ed articles published in today's Frankfurter Allgemeine Zeitung and Dagens Industri to call on EU leaders to grasp the nettle and embrace reform.

The list of signatories, who have all signed in a personal capacity, includes household names and is particularly significant because many have not spoken out on the issue of 'Europe' before. They include Karl-Johan Persson, the CEO of Swedish retail giant H&M, Dr. h.c. August Oetker, Chairman of renowned German food producer, Dr. Oetker, Douglas Flint CBE, Group Chairman of HSBC Holdings, Joanna Shields, Chief Executive of Tech City, and Sir John Peace, Chairman of Standard Chartered Bank.

The business leaders and entrepreneurs who have signed up to this initiative come from businesses in different sectors of the economy and, uniquely, this initiative, coordinated by Open Europe, cuts across borders.

As you can see below, this has already caused quite a splash in Sweden, with the front page of the financial daily Dagens Industri carrying the headline "Come on, EU!":

In Germany, six business men and women including Dr h.c. August Oetker, Chairman of the Oetker Group – one of Europe’s largest family-owned businesses – and Marie-Christine Ostermann, former head of the German Association of Young Entrepreneurs, wrote an article arguing that, "The EU does not have to move towards 'ever closer union,' but needs to become ever more open and flexible":

In a letter to the Sunday Times, 52 British executives and entrepreneurs demand a “bold reform agenda” focused on trade and transparency:

This joint initiative shows that there is a market across much of Europe for an EU reform agenda centred on making the EU more business-friendly, internationally competitive and democratically accountable. However, the only way to do that is to make the arguments heard across Europe and put so much pressure on politicians that it cannot be ignored.

This is the first step in pushing a robust reform agenda ahead of the European elections next year and beyond, and we will be encouraging plenty more entrepreneurs across Europe to sign up to this initiative. So watch this space!

Is the UK winning the argument on EU regulation?

Yesterday afternoon Open Europe hosted Business and Energy Minister, Michael Fallon MP, the man responsible for pushing the UK's 'smarter regulation' agenda in Brussels. This is a subject close to Open Europe's heart as we have produced a number of highly detailed reports on the cost of EU regulation - £124bn gross between 1998 and 2010.

In his speech, Fallon argued that while the single market had the potential to be the "greatest platform for economic growth", overly burdensome regulation coming from the EU was choking off potential jobs, growth and competitiveness, and as argued by David Cameron in his EU speech, Europe could not afford this in the global context. "The burden of unnecessary costs" was carried more heavily by Europe than by its competitors, he said.

He argued that this burden falls particularly hard on SMEs, citing a consultation which found that many had to employ a dedicated member of staff simply to process the workload stemming from the EU's REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances) Directive. Other areas of EU legislation identified as particularly onerous were the Working Time Directive, the Agency Worker's Directive and other social and environmental rules.

During the Q&A session he pointed out that leaving the EU was not a panacea - as UK companies exporting to the EU would still have to comply with many of these regulations without having any say over them, something currently vexing the Norwegians (see here for a more detailed look at this issue).

Fallon argued that progress had already been made on over-regulation on both the UK and EU fronts, pointing to strong support from other member states including Germany, which resulted in the recent letter signed by twelve member states calling for a reduction in the overall EU regulatory burden. Fallon pointed out that as a result of the crisis, many member states had become a lot more receptive to UK-style reforms, with France and Poland adopting a 'one in, one out' approach to regulation based on the UK model. He was also hopeful that Mediterranean countries would become allies in this fight given their need to restructure their economies and said he was disappointed they had not done so already.

On the UK front, Fallon claimed that the coalition's six-point transposition plan for EU laws had resulted in the elimination of costs associated with gold-plating, i.e. that when adopting new EU laws, the UK would only impose the minimum standards necessary to comply.

However, as Fallon acknowledged, there is still more to be done, arguing for example that EU impact assessments ought to be independently verified, and that a "cultural shift" needed to take place in Brussels.

Business backs Cameron's call for a mandate on Europe

A letter in today's Times from some leading UK business people supporting Cameron's approach:

EU reforms must come before any membership referendum

Business faces ever more burdens from Brussels and the single market in Europe has not yet been fully realised

Sir, As business leaders we are passionate about Britain’s prosperity. We agree with the Prime Minister that Britain’s best chance of success is as part of a reformed Europe. We need a new relationship with the EU, backed by democratic mandate.

Business faces ever more burdens from Brussels and the single market in Europe has not yet been fully realised. The euro crisis has created the circumstances for a new EU settlement. This is the moment to push for a more flexible, competitive EU that would bring jobs and growth for all member states. That means completing the Single Market and quashing the culture of red tape.

Now is our chance to reform the EU from within. The Prime Minister is right. This is a European policy that will be good for business and good for jobs in Britain.

The full list of signatories:

John Ayton, Bremont Watch; Sir Anthony Bamford, JCB; Sir John Beckwith, Pacific Investments; Samir Brikho, AMEC; Sir George Buckley, Arle Capital; William Butler-Adams, Brompton Bicycles; Stephen Catlin, Catlin Group; Ian Cheshire, Kingfisher; Andrew Coppel, De Vere Group; Gerald Corbett, Betfair; Mick Davis, Xstrata; Philip Dilley, Arup; Paul Drechsler, Wates Group; Ralph Findlay, Marston’s; Rupert Gavin, Odeon & UCI Cinemas; Ben Gordon, Britvic; Michael Gutman, Westfield Group; Lord Harris, Carpetright; Aidan Heavey, Tullow Oil; Robert Hiscox, Hiscox; Brent Hoberman, made.com; Sebastian James, Dixons Retail; Luke Johnson, Risk Capital Partners; Andrew Law, Caxton Associates; Lord Leach, Open Europe; Alistair McGeorge, New Look; Jon Moulton, Better Capital; Charlie Mullins, Pimlico Plumbers; Jamie Murray Wells, Glasses Direct; John Nelson, Hammerson; Richard Nichols, College Group; Tim Oliver, Hampden Holdings; David Ord, Bristol Port Company; Alan Parker, Brunswick; Sir John Peace, Burberry; Tony Pidgley, Berkeley Group; Sir John Ritblat, Delancey; Nick Robertson, ASOS; SIr Simon Robertson, Rolls-Royce; Xavier Rolet, London Stock Exchange; Sir Stuart Rose, Ocado; Joanna Shields, Tech City Investment Organisation; Michael Spencer, ICAP; Tim Steiner, Ocado; James Townshend, Velcourt Group; Ted Tuppen, Enterprise Inns; Moni Varma, Veetee; Paul Walsh, Diageo; Robert Walters, Robert Walters; Joseph Wan, Harvey Nichols; Tom Wells, Charles Wells Pub Company; Nick Wheeler, Charles Tyrwhitt Shirts; Bob Wigley, Stonehaven; Charles Wigoder, Utility Warehouse; Lord Wolfson, Next

"Single Market yes. Federal Europe No"

As we argued here, though there has been quite a bit of noise from the business community over recent weeks, few interventions are actually dealing with the sharp end of the policy debate, e.g. what is the greatest threat to business: Trying to artificially lock in the status quo - and risk voters throwing out the baby with the bathwater; or seek a new deal that will put the UK's relationship with the EU on a sustainable footing? Car manufacturers, for example, rightly warn that Britain leaving the EU would be bad for their industry. However, they fail to explain - as do many of the usual suspects - how to square UK public opinion and further eurozone integration, with continued EU membership. To wish away the debate - saying that it causes "uncertainty" - is hardly credible, since for so many different reasons, the debate is happening any way, whether we like it or not.

Which is why this piece by John Longworth, the director general of the British Chambers of Commerce, was so timely. He writes:

What may surprise some in the Westminster bubble is that the view from the coal face is different from the one trotted out by some high-profile captains of industry and the chief executives of multinationals. In fact, it doesn't follow either the classic Europhile or Europhobe lines [ a point we made here - OE remark]. Britain's business community, many of whom export, wants to see real and substantive change in our relationship with the European Union. While four out of five insist that they want to remain part of the European single market, an even larger number say they are against further integration and transfers of power from Westminster to Brussels.

The prime minister's preferred approach of "renegotiation and referendum", then, is an option that chimes with the thinking of many pragmatic businesspeople whose primary interest in the European debate is ensuring that they can trade, hire, export and flourish. Forty-seven per cent of our members, a large plurality, think this is the right approach. In the simplest terms, a settlement that supports their business interests would simultaneously safeguard the UK's economic interest. It is premature to talk of extreme solutions to Britain's European question.

Yet maintaining the status quo, which both Europhiles and approximately one-quarter of companies favour, is simply not a viable option. Europe is changing. Britain cannot expect the EU to simply stand still while it navel-gazes and debates its future involvement. Nor can it just seek to negotiate favourable reforms within the club's existing rules, because the club's rulebook is changing. If Britain does nothing to renegotiate its position now, it will be dragged down the road of ever-closer union in the wake of the Eurozone. That raises the spectre of an "in/out" referendum in future that no pro-European campaign could realistically hope to win.

Similarly, Lord Wolfson - Chief Executive of Next - in the Sunday Telegraph:

I have listened carefully to the arguments of certain business people who oppose the renegotiation of our position in Europe. All their fears revolve round the loss of the single market. They rarely espouse the need for more regulation, less democracy or wider EU powers over our justice system. Implicitly, they argue that these burdens are the price we must pay for remaining in the EU. They claim it is risky for the Prime Minister to even try to negotiate a better deal for Britain. They assert that the uncertainty of renegotiation will undermine our economy. This is nonsense. Investors already know that British support for the EU is fragile. Unless we call time on the process of EU aggrandisement, democratic opposition will make our place in the EU even more uncertain. In the real world, very little investment is lost as a result of this so-called uncertainty, because it is already a fact of life. These scare tactics are all too familiar to me. They were the same threats used by the same people when they urged us to join the euro. I remember their warnings of economic isolation and ruin.

 He concludes:

Those Europhiles who argue that we must either accept a federal Europe or lose our place in the EU unwittingly act as recruiting sergeants for their opponents who say we should leave. Before adopting either extreme, we should at least try to negotiate a middle way – an EU that the majority of us would be happy and proud to be a part of. The message is clear: single market yes, federal Europe no.

Spot on.

Why you cannot define business opinion on Europe in terms of ‘Eurosceptics’ vs ‘Europhiles’

On his Telegraph blog, Mats Persson argues:

Ahead of this week’s EU speech by David Cameron, journalists are searching high and low for businessmen and women to go on record on the vexed question of Britain’s European future. Alas, there’s no simple answer that makes for good radio or TV. Though broadly reflecting sceptic sentiments amongst the public, the business community is split and largely undecided, and as always it depends on the sector, size and position of a given firm. One thing is clear though: there’s absolutely no way the UK debate on Europe – among business or other groups for that matter – can be defined using the binary Eurosceptics-v-Europhiles logic that some in the media still cling on to. It’s far more fluid than any fixed pro or anti campaign.

A poll published yesterday by the British Chambers of Commerce is a case in point. Of BCC members, only 9pc of firms want closer EU integration, 12pc want to leave the EU altogether, 26pc want the status quo, 6pc are unsure. But here’s the interesting part: a full 47pc want "a looser relationship…but with the UK remaining a member of the EU".

Over the last few days, several business leaders have warned against the consequences of the UK leaving the EU, but very few have addressed the sharp end of the actual policy debate. A letter from Roland Rudd of Business for New Europe, for example, called on the UK to “lead” in Europe (surprise, surprise). But though these types of interventions are often written up as “Europhiles” challenging “Eurosceptics”, what they in fact show is how far the centre of gravity has moved (there’s no talk of more EU integration, as in the past, and certainly no talk of joining the euro, which Rudd used to passionately argue for). Also, they tell us very little. Most business people would have no problem agreeing with the “completion” of the single market, more trade deals, securing market access etc. Or, as the Rudd letter put it, “a strong reformed EU with Britain at the heart of it”. But what does this mean exactly? You’d be hard pressed to find a business person calling for “an unreformed EU with Britain at the margins”.

Remember, in policy terms, the UK quitting the EU isn’t actually on the table, as David Cameron has said several times and repeated on the Today programme this morning. Apart from Ukip (with no MPs), no party with national significance argues for it, so a "better off in" business letter misses the point (at least for now). Instead, the key question is: which is a greater threat to the trade benefits currently enjoyed by business in Europe? A new EU-UK deal or the status quo?

Here, Rudd’s lot will say that any “wholesale renegotiation” will be rejected by EU partners (as it means a “lower-cost membership”, etc) and, subsequently EU membership will be rejected by the British electorate in a referendum as expectations have been raised too high.

But there’s another way to look at it: given that around half of the British people favour the UK leaving the EU absent a new deal in Europe, it is, in fact, the “do nothing” option – not renegotiation – that is the biggest threat to the UK’s EU membership. Continue with EU membership despite the will of the British people and there may soon come a day when the electorate throw out the baby – the market access, free movement, mutual recognition, behind-the-border liberalisation etc – with the bathwater (the high non-trade costs around EU membership).

There are two other factors that should make business nervous of the “do nothing” option: First, further eurozone integration – not least via banking union – means that the status quo isn’t an option in Europe anyway. The prospect of a new “club within a club” has clear implications for business. The UK has to negotiate to secure existing rights, at least. Secondly, and most fundamentally, the EU simply needs reform to bring it up to speed with the global business environment: returning labour market laws closer to the shop floor, less EU micromanaging in environmental laws, ending the recycling of regeneration cash in Europe – riddled with opportunity costs for business – ending growth-destroying farm subsidies, and securing safeguards against investment-diverting measures in financial services, would, for example, all genuinely help business in Britain and beyond. That will require a new deal in Europe – not tinkering at the margins. It will also require a debate focussed on policy, not clichés.

This is a very complicated debate, as the interaction between UK domestic politics and eurozone politics continues to produce an exceptionally fluid and emotional debate. To expect business people – who after all have a business to run – to have a firm view of a proposition that has not yet been made, is pretty unrealistic. But please, don’t make the mistake of thinking that this is a debate between two distinct camps. And that largely goes for the debate as a whole.