The CBI gets it wrong. Again.

CBI Director General John Cridland

CBI Director General John Cridland

This morning, the BBC announced with their usual sycophantic enthusiasm that the CBI had determined that “membership of the EU was worth £3000 per year to each British household”, and that the UK should stay in the EU and work to reform it, not leave it and “lose influence”. 

Of course governments of all stripes have been “working to reform it” for forty years, without success.  The triumph of hope over experience.  The EU is beyond reform, and deserves to be put out of its misery.  It is surely self-evident that the UK, as an independent nation, would have more global influence than it has as an off-shore province in a country called Europe.  All too often we add the weight of our numbers to EU positions that we fundamentally disagree with.  As a country broadly favouring an “Anglo-Saxon”, free-market approach, we find ourselves in a permanent structural minority.

The only way the CBI could have reached its bizarre figure of £3000 per household is by making the implicit – and absurd – assumption that when we leave the EU, we will cease to trade with it.  But at the UKIP conference in October, former CBI Chief Digby Jones (John Cridland’s predecessor) highlighted the fact that if we left the EU, then within 24 hours we would have an FTA. We run a trade deficit with the EU, so it is strongly in their interests to continue to trade with the UK.  Does anyone imagine that those smart guys in Munich are going to say “OK, Britain, if you’ve left the EU, we won’t sell you any more BMWs”?  No.  I don’t think so.  And if they’re going to sell us their BMWs and Mercedes and Audis and Peugeots and Fiats, they’re going to have to keep their markets open for our Jaguars and Land Rovers and Nissans and Hondas and Toyotas.

So the EU won’t try to deny us a free trade deal.  And existing trade deals between the EU and third countries, like Korea, would be grandfathered to the UK as we became independent.

In terms of influence, no doubt the CBI will tell us that “We’d be like Norway – obliged to keep to EU rules but with no influence in making the rules”.  As an MEP, I can tell them that we have precious little influence on making the EU’s rules as it is.  And Norway is the wrong comparison.  Of course on our exports to the EU we’d still have to conform to EU product specs – just as we do with exports to the USA, or anywhere else.  That’s a common-place of international trade (in which I spend much of my career).  But the 90%+ of our economy that isn’t exported to the EU would be free of the stultifying weight of EU regulation, which costs us tens of billions of pounds a year.

Instead of comparing the UK to a small peripheral country like Norway, we need to recognise that in terms of GDP, the UK comes somewhere between Canada and the USA.  Those countries don’t accept “regulation by fax” from Brussels, and nor should we.  China seems perfectly capable of exporting to the EU without being a member.

In a way the CBI position is surprising.  There’s a lot of research showing that UK businesses understand the damage that EU membership is doing.  The recent Business for Britain poll (Matthew Elliott) of more than 1,000 bosses, from companies of all sizes, showed 66 per cent in favour of in/out referendum.  46% of business leaders think that the costs of EU red tape outweigh the benefits of membership.  56% believe we should repatriate employment law, environmental rules and health & safety legislation.

Far from offering economic benefits, two distinguished economists, Patrick Minford and Tim Congdon, have independently estimated that EU membership costs the UK economy over 10% of GDP.  Which if you work it out, Mr. Cridland, is about £6000 per household per year.  A cost, not a benefit.  The CBI estimate is out by about £9000.

Let’s remember that the CBI used to be one of the “authoritative voices” calling for Britain to join the €uro.  They were wrong then.  They’re wrong now.


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11 Responses to The CBI gets it wrong. Again.

  1. Mike Spilligan says:

    As the two figures, +£3000 and minus£6000, are so far apart I’d really like to see some of the detail. Being an EUSceptic I suspect that the CBI figure includes lots of intangibles.

  2. Neil Craig says:

    In Scotland the CBI incredibly announced that their members didn’t want corporation tax reduced to Irish levels (at the time this was the surprisingly sensible SNP policy).

    The need of top industrialists to curry favour with the state in a society where half of gdp is spent by the state cannot be overestimated.

  3. Jane Davies says:

    Apologies for going off topic Roger but you will need to address what UKIP’s policies are on pensions. As you know this government is wanting to include Clause 20 in the new pension reform bill, a disgraceful policy that discriminates against just 4% of state pensioners. There is a group that represents state pensioners who live in EU countries who are putting out scare stories that if the UK leaves the EU there is a possibility that their pensions will be frozen along with the 4% who live in “frozen” countries. I know you have blogged about this injustice and have assured me that UKIP will end this discrimination, but you need to advise these pensioners as thousands could be scared into voting to stay in.
    Again, apologies for going off topic.

    • I’m not sure off-hand whether we have a freshly-minted UKIP pensions policy (and I’m well of pensionable age!). But I do know that when we leave the EU we’ll be tens of billions better off, so we’ll be better placed to support the things we believe in — including pensions.

      • Jane Davies says:

        The election is not that far off Roger so with respect is it not time to have a pension policy? This is a huge issue and as the majority of voters tend to be the “mature” members of the population they will expect UKIP to have one.

  4. Anthem says:

    I think we can stick at least another tenner on the cost figure.

    EU In Wasting Money Shock

  5. Chris says:

    The CBI represents big business. Big business has no problem with EU laws and regulations as they’re big enough to employ many people to deal with them. The small businesses cannot. It puts the big boys at an advantage over the little guy.

    Big business loves cheap East European immigration. They don’t have to pay the dole for all the unemployed native Brits.

    There is going to be a concerted effort next year, from the CBI, BBC, left-wing newspapers and the Roland Rudd led lobby groups (British Influence and Business For New Europe) against UK withdrawal from the EU.

    There are a lot of vested interests in the status quo.

  6. The CBI’s position isn’t in the least surprising, Roger, as so forensically argued by Patrick O’Flynn in his brilliant speech to conference in September.

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