Opinion

Businesses tell Labour the EU status quo has to change

5 min read

28 September 2015

The Institute of Directors (IoD)has revealed new figures showing businesses want political reform of the EU.

The IoD made its case for business reform of the EU at the Labour party conference, as it said a half of all UK owners are undecided which way to vote in the upcoming referendum.

Coming off the back of recent surveys from the British and Scottish Chambers of Commerce, the IoD said 65 per cent of its members agreed with the statement “from my organisation’s perspective, the benefits of the UK remaining a full member of the EU outweigh the negatives”.

However only 13 per cent think the EU currently has a viable socio-economic model, with 51 per cent declaring that the way they vote in the referendum will depend on what reforms prime minister David Cameron is able to achieve. Only 40 per cent said they intended to vote to remain under all circumstances and seven per cent said they will definitely vote to leave.

Business leaders said they want Europe to focus more on securing trade deals and stay away from social and employment law with over half, 51 per cent, stating that EU interventions in these areas were unhelpful.

Cuts to red tape, an amendment to the principle of “ever closer union” and measures to make the EU economy work better are the reform priorities for members.

Six in ten said that the referendum will create uncertainty for their business, but 51 per cent still backed the prime minister’s decision to hold it.

At a panel discussion at the Labour conference entitled “The run-up to the EU referendum – what role should Labour play?”, Simon Walker, the IOD’s director general, said the referendum was the biggest political event of the next five years.

“The result of the EU referendum hangs in the balance. There is division within both major parties on the UK’s future role in Europe. In this tense atmosphere, the most important question that must be considered is what effect staying, or leaving, would have on the economy,” he said.

“On balance, IoD members think the benefits of staying in the EU outweigh the negatives, but half have not yet decided how they will vote. Europe is currently struggling to deal with the many challenges it faces. The refugee crisis and the uncertainty over Greece’s future may be the immediate issues dominating the discussions of EU leaders, but the underlying problem is a lack of economic competitiveness,” he said.

“It is vital that politicians here and across the continent move away from a rigid Europe which seeks to micro-manage the economies of member states. In particular, we are calling on the Labour party to acknowledge that maintaining the status quo is not good enough. Individual states have different economies and working practices. No matter how well-intentioned, employment regulation and business red tape imposed in a blanket fashion make it unnecessarily hard for businesses across Europe to operate. 

“We urge Jeremy Corbyn, and his shadow business secretary Angela Eagle, to recognise the appetite across many members of the EU to drive through reforms to make their economies more competitive and increase growth.”

Allie Renison, head of Europe and Trade Policy at the IoD, added: “Europe is at its best when it is promoting policies for growth and helping businesses create jobs. IoD members are clear that the EU’s current model isn’t working, and the bloc as a whole needs to be reformed to make it more competitive. 

“There are concerns over Europe’s tendency to intervene on areas like employment law and social affairs. The needs of businesses and employees differ from region to region, let alone across a political union of 28 members. Decisions in these areas should, as far as possible, be made by national parliaments.

“Recent European interventions, such as the court rulings on the inclusion of overtime in employees’ holiday pay, and on working hours for mobile employees, threaten to hit small and medium-size businesses in particular. It is a worrying development that the main source of new European labour law now seems to be the EU court. Businesses need certainty that rules will not be changed halfway through the game.”