City reaction to EU referendum split

“This is a political decision. This is not an economic decision."

Business reaction to Cameron's decision to give Britons a referendum on Europe today was split: some worried about economic uncertainty while others welcomed the opportunity to renegotiate trading terms.

Sir Martin Sorrell, chief executive of advertising group WPP:

Having a referendum creates more uncertainty and we don’t need that.

This is a political decision. This is not an economic decision. This isn’t good news. You added another reason why people will postpone investment decisions.

British Chambers of Commerce director general John Longworth:

Announcing plans for a referendum on British membership puts the onus on the rest of Europe to take the Prime Minister seriously, as they will now see that he is prepared to walk away from the table.

[But] the lengthy timescale for negotiation and referendum must be shortened, with the aim of securing a cross-party consensus and the outline of a deal during this Parliament.

John Cridland, CBI Director-General:

The EU single market is fundamental to Britain’s future economic success, but the closer union of the Eurozone is not for us.

The Prime Minister rightly recognises the benefits of retaining membership of what must be a reformed EU and the CBI will work closely with government to get the best deal for Britain.

Peter Sands, chief executive of Standard Chartered bank:

The UK needs to remain very much part of the EU, but I can completely understand why prime minister Cameron thought it necessary to offer the people a referendum” 

Europe is changing and as the biggest country in Europe outside the eurozone, its relationship is going to change.

Mark Boleat, policy chairman at The City of London Corporation:

London’s position as Europe’s leading international financial and business centre is crucial to sustaining jobs and growth not just in the UK but across the continent.

Simon Walker, director general of the Institute of Directors:

A future referendum to decide the workings of our relationship is the best way to affirm Britain's participation in a free-market Europe which is competitive and deregulated.

City split on referendum. Photograph: Getty Images
Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.