With just weeks to go before the referendum on whether the UK should remain in or leave the EU, things are heating up. The country seems divided – approximately 50% of people are voting yes and 50% are voting no – and within the business community the numbers are about the same. Britain’s decision will be critical to my business, as well as many others, so it’s something I have thought about very carefully.
My position on the impending vote has not been an easy one to formulate. In part this is because the government and speakers of this debate have resorted to fear-mongering, rather than present solid facts. But so many provocative statistics and arguments have been bandied about that it’s hard to know what’s true. What will really happen economically in each scenario? Can the government’s financial projections be relied upon?
Certain numbers seem worrying. Chancellor George Osborne, for example, has calculated that every household in the UK will suffer if Britain leaves the EU and be an additional £4,300 worse off than before. The Organisation for Economic Co-operation (OECD) also says that Brexit will bring financial disaster to the UK, warning that GDP will plunge by 3.3% by 2020, lowering the annual household income to £2,200. President Obama weighed in on the issue, adding that the UK would be significantly weaker outside the EU and trade with the USA would suffer. The threat put forward is that severing ties with the EU will prevent the UK from taking full advantage of the global economy and reduce its global influence.
Can we believe these projections? I think not. More likely is that release from the EU, with its elaborate, top-heavy bureaucracy and its tough trading regulations, would stimulate economic growth because it would allow us to engage freely, in an agile and modern way, with the world’s fastest-growing markets.
The UK would not lose trading partners: trade is based on hard-nosed practicalities and the UK has a lot to offer as a trading partner. Rather, in the case of Brexit, the UK would be in a position to negotiate more favourable trading agreements with the trading partners most beneficial to our specific needs. Possibilities for trade agreements outside the EU include: negotiating a bilateral deal, like Canada’s; becoming a member of the European Free Trade Association, like Norway; or having no specific agreements within the EU and relying on access through individual negotiations, like those states that are members of the World Trade Organization. Our options for trade outside the EU should not be disregarded and we shouldn’t underestimate our power in the market.
In addition to placing trading restrictions on the UK, the EU’s bureaucracy is a financial drain on us as well, costing our taxpayers a great deal of money. The UK sends about £13bn to Brussels and gets around £5.9bn back. Of the money we receive, £4.5bn goes to the agricultural sector and the poorer rural regions of the UK, whilst just £1.4bn is fed into private industry. Other sectors have not seen a benefit from Britain’s membership dues to the EU and overall the UK is down around £7bn each year.
Finally, there are social considerations, which impact businesses as well as individuals. Reclaiming control of our own governance from Brussels would give us the opportunity to tackle problems within our borders, such as the heavy pressure on our resources and public services. This pressure is down to the fact that England is the most densely populated country in Europe and this is only intensified by EU-mandated net migration into the UK of 329,000. The proposed drop to around 185,000 a year would ease that pressure.
Yes, change is uncertain and risky. But business people understand that there are no absolute certainties and remaining static rather than evolving and adapting represents the greatest risk. The reward for taking a risk and making the Brexit change would be a reduced regulatory burden, control of our own borders and immigration policy, a net annual saving of £7bn and the ability to negotiate our own trade agreements. As a businessman, this makes good sense to me.
Sayed Bukhari is the founder of HPM Developments, the bespoke turnkey build and design firm.