The business argument is with the EU

Even if the politics are a disaster zone.

Ever since the financial crisis, a previously buoyant eurozone has turned into a disaster zone. The single currency has lurched from crisis to catastrophe as the finances of member states have come under pressure. Bailouts that appear to be funded in large part from northern Europe are keeping several countries in southern Europe afloat. The next crisis is potentially lurking at the tail end of summer, with Cyprus due to get its next tranche of cash from the unofficial troika of the EU, ECB and IMF in early September. That is dependent on the country meeting stringent financial and budgetary targets and there is little evidence so far that they will be met.

With a German election by then just around the corner, it is unlikely that German chancellor Angela Merkel will be in the mood for leniency. The upshot could be that Cyprus is allowed to exit the single currency – the last six months having bought enough time to make it potentially a more orderly exit, and the economy is small enough for the ramifications to be less seismic than if a country such as Greece had fallen out.

Regardless of what happens in September (and it is as easy to paint a picture in which Cyprus gets the cash and everything carries on as it is), the eurozone’s troubles at least partly explain why the subject of the EU and the UK’s role within it is so high on the political agenda. As leader of the Conservative Party, David Cameron set out his stall clearly. He said he didn’t want the party to keep “banging on about Europe”. But the growth of anti-EU sentiment and the seemingly unstoppable rise of UKIP in particular has meant that, as prime minister, Cameron has had to bang on about it quite a lot.

UK politicians and the media are having to regularly discuss details (and not the possibility) of previously abstract ideas such as a referendum, renegotiation of the country’s relationship with the EU, or even complete withdrawal. The trouble is that all these discussions happen at a volume and intensity that rarely allow for sensible debate. Economic arguments are formed and numbers and statistics thrown around with little heed for anything other than scoring points and winning the argument.

It was somewhat sobering this month then to get a snapshot of what the UK’s exporters (clearly the key to UK economic recovery) think about Europe. The most often repeated story when it comes to discussions about where the UK recovery will come from is that exporters will have to seek out sales in high-growth emerging markets in far-flung corners of the world. So-called BRIC economies (Brazil, Russia, China and India) are cited above all as the key for our future success. Well, this didn’t chime with recent research conducted by economia. We asked the leaders of 500 businesses (a mix of those already exporting and those not currently doing so but with plans to do so in the next three to five years) to rate different markets around the world for their importance.

While it was no surprise to see Western Europe rated as important or very important this year by more respondents than any other market (71 per cent compared to the next most popular market, Asia at 55 per cent), what was less expected was the pattern when respondents were asked to rate the importance of markets in three to five years’ time. Here again Western Europe dominated by a similar margin. Even more unlikely was the rise of North America in the future (up by 5 per cent), knocking Asia back into third place.

Part of the explanation for the continued preference for Europe is the geography. Cost of exports was cited as a concern for and a factor in choosing markets by almost all respondents regardless of size or sector. And while the short distances help, some of the ease of doing business in Europe is driven by the standardisation of market rules and regulations and the lack of need to comply with different country guidelines or indeed to pay any import duties.

It appears from this that when asked about Europe on a purely business basis, without any of the political or emotive overlay, there is overwhelming support for the simplification benefits that arise from EU membership. More detailed analysis of the findings of this research needs to be conducted, but initial findings suggest there is also a worrying reluctance on the part of UK exporters to tap into the phenomenal growth of the emerging economies. In the mid-term at least, the ease of doing business in Europe appears to be winning over the potential returns from more long-term investments in places such as China, India, Russia or Brazil.

That would suggest that keeping close to Europe may be economically beneficial regardless of the politics.

This story first appeared on economia

Photograph: Getty Images

Richard Cree is the Editor of Economia.

Photo: Getty
Show Hide image

Brexit could destroy our NHS – and it would be the government's own fault

Without EU citizens, the health service will be short of 20,000 nurses in a decade.

Aneurin Bevan once said: "Illness is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune, the cost of which should be shared by the community."

And so, in 1948, the National Health Service was established. But today, the service itself seems to be on life support and stumbling towards a final and fatal collapse.

It is no secret that for years the NHS has been neglected and underfunded by the government. But Brexit is doing the NHS no favours either.

In addition to the promise of £350m to our NHS every week, Brexit campaigners shamefully portrayed immigrants, in many ways, as as a burden. This is quite simply not the case, as statistics have shown how Britain has benefited quite significantly from mass EU migration. The NHS, again, profited from large swathes of European recruitment.

We are already suffering an overwhelming downturn in staffing applications from EU/EAA countries due to the uncertainty that Brexit is already causing. If the migration of nurses from EEA countries stopped completely, the Department of Health predicts the UK would have a shortage of 20,000 nurses by 2025/26. Some hospitals have significantly larger numbers of EU workers than others, such as Royal Brompton in London, where one in five workers is from the EU/EAA. How will this be accounted for? 

Britain’s solid pharmaceutical industry – which plays an integral part in the NHS and our everyday lives – is also at risk from Brexit.

London is the current home of the highly prized EU regulatory body, the European Medicine Agency, which was won by John Major in 1994 after the ratification of the Maastricht Treaty.

The EMA is tasked with ensuring that all medicines available on the EU market are safe, effective and of high quality. The UK’s relationship with the EMA is unquestionably vital to the functioning of the NHS.

As well as delivering 900 highly skilled jobs of its own, the EMA is associated with 1,299 QPPV’s (qualified person for pharmacovigilance). Various subcontractors, research organisations and drug companies have settled in London to be close to the regulatory process.

The government may not be able to prevent the removal of the EMA, but it is entirely in its power to retain EU medical staff. 

Yet Theresa May has failed to reassure EU citizens, with her offer to them falling short of continuation of rights. Is it any wonder that 47 per cent of highly skilled workers from the EU are considering leaving the UK in the next five years?

During the election, May failed to declare how she plans to increase the number of future homegrown nurses or how she will protect our current brilliant crop of European nurses – amounting to around 30,000 roles.

A compromise in the form of an EFTA arrangement would lessen the damage Brexit is going to cause to every single facet of our NHS. Yet the government's rhetoric going into the election was "no deal is better than a bad deal". 

Whatever is negotiated with the EU over the coming years, the NHS faces an uncertain and perilous future. The government needs to act now, before the larger inevitable disruptions of Brexit kick in, if it is to restore stability and efficiency to the health service.

0800 7318496