David Cameron is holding face to face talks with EU leaders ahead of the European Council Summit as part of his aim to renegotiate the terms of the UK’s EU membership before the referendum at the end of 2017.
His priorities will include greater powers for national parliaments, an opt-out for Britain from the principle of ever closer union and restrictions on welfare entitlements.
Mr Cameron said: “It will take us another step closer to addressing the concerns that the British people have about the EU”.
Clearly opinion about Britain’s attempts to renegotiate among member states is divided and reaching a deal is likely to be a long and difficult process. At the recent state banquet, the Queen spoke of the need for unity in Europe and how the continent must strive to “maintain the benefits of a post war world”. She also warned that division in Europe is dangerous.
If the promised referendum goes ahead it is imperative that the population fully understands the implications for business of leaving the EU. The risks and unforeseen consequences of holding a referendum on such a key and emotive issue without ensuring voters have a full understanding of what it means for the future of UK business are considerable.
Economically, according to think tank Open Europe in a report by the BBC, a realistic scenario is “between a 0.8% permanent loss to GDP in 2030 and a 0.6% permanent gain in GDP in 2030, in scenarios where Britain mixes policy approaches".
In the same report an alternative scenario presented by The Centre for Economic Performance, at the London School of Economics, is a 6.3% to 9.5% reduction in GDP, "a loss of a similar size to that resulting from the global financial crisis of 2008/09". The best case, according to their analysis, is a loss of 2.2% of GDP, although it does not take into account as wide a range of factors as the Open Europe study.
Arguments against the UK remaining in the EU cite the fact that the UK’s net contribution to the EU, taking into account the rebate was £11.3bn in 2013. However this is a drop in the ocean compared to the potential benefit to business of being in the single market. Benefits include access to skilled labour of migrant workers, reduced barriers to trade which make the EU our main trading partner worth more than £400bn a year, or 52% of the total trade in goods and services. Those who support Britain remaining in EU question whether a medium sized open economy could be as influential in an increasingly fractured trading system dominated by the US, the EU and China. Being part of the single market makes it easier for Britain to penetrate emerging markets and makes the British economy more attractive to foreign investment.
A balanced understanding is paramount to making a collective decision which will benefit the UK in the future and clearly there are arguments against remaining in Europe. Evidently the increasing turmoil in the Eurozone with the Greek crisis poses a real risk for UK businesses. More generally those who argue that the UK would be better off out of the EU believe there is little evidence to suggest that trade would fall substantially or that jobs would be lost. In addition to making considerable savings on membership fees some suggest that a reduction in migration would lead to increased job opportunities for British workers and a “free” UK could potentially establish bilateral trade agreements with fast growing export markets and a new trading relationship with EU.