CBI Factsheet – benefits of EU membership outweigh costs

CBI Factsheet

BENEFITS OF EU MEMBERSHIP OUTWEIGH COSTS

CBI FACTSHEET – BENEFITS OF EU MEMBERSHIP OUTWEIGH COSTS

71% of CBI member businesses report that the UK’s membership of the EU has had an overall positive impact on their business, including 67% of SME members. Only 13% said there had been a negative impact. Overall,78% said they would vote to remain in the EU in a referendum, with 77% of SME’s taking the same position.
A CBI literature review suggests that the net benefit of EU membership to the UK could be in the region of 4-5% of GDP or £62bn-£78bn a year – roughly the economies of the North East and Northern Ireland taken together.

UK firms’ access to the Single Market goes beyond a standard free-trade agreement – the EU has eliminated tariff barriers and customs procedures within its borders, and has taken strides towards removing non-tariff barriers – such as different product regulations – by enforcing EU-wide competition law and coordinating product regulations.
76% of CBI members say that the ability to freely buy and sell products in the EU has had a positive impact on their business, including 74% of SMEs.
It has been estimated that UK trade with some countries in Europe could have increased by as much as 50% as a result of EU membership.
The Single Market also underpins access to European supply chains. In 2009 $207bn of the UK’s total of $293bn of exports to the rest of the EU27 was used as inputs to industries, rather than being consumed directly; and the UK imported $161bn of intermediates from the EU27 in 2009. Imported intermediates are important even to domestically-focused sectors: the health & social care sector used $19bn of imported intermediates (principally of pharmaceuticals and other chemicals).

The EU is a springboard for trade with the rest of the world through its global clout: it accounted for 23% of the global economy in 2012 in dollar terms. Through 30 trade deals negotiated by the EU, including the Single Market itself, British firms have full access to a $24 trillion market. The recent deal with Canada and on-going discussions with Japan and the US could double this to $47 trillion – the UK would struggle to achieve the same quality of trade deals independently.
58% of CBI members think that extra-EU trade agreements have had a positive impact on their business, including 55% of SMEs, compared to 3% who thought the impact was negative.

Investment flows across borders inside the EU have roughly doubled following the introduction of the Single Market. As the EU’s leading investment destination, the UK was a key beneficiary: the EU accounted for 47% of the UK’s stock of inward FDI at the end of 2011, with investments worth over $1.2 trillion.
Access to the EU Single Market has also helped attract investment into the UK from outside the EU.
52% of CBI members say that the ability to invest in other EU states without restriction has had a positive impact on business.

Free movement of labour helps UK business plug skills gaps. 63% of CBI members say that the ability to recruit and transfer staff from across the EU has been positive for business, including 48% of SMEs. Overall only 1% of members said the impact had been negative – and only 2% of SMEs said it had been negative.
UK citizens have also benefited from free movement of labour – at least three-quarters of a million live in other EU countries.
CBI recognises that there is public debate over immigration – consideration must be given to how free movement can practically operate in an EU of 28 in a way that commands public support.

There is recognition that common rules are needed to support the Single Market. 52% of CBI members think that common product standards across the EU are a positive, including 50% of SMEs. Overall, only 15% of members said that the impact of common standards had been negative.
However, firms are concerned about labour market regulation. 49% of CBI members say that the pan-EU employment rights in areas such as working hours are a negative for business.

The UK’s net contribution to the EU budget is around €7.3bn, or 0.4% of GDP. As a comparison that’s around a quarter of what the UK spends on the Department for Business, Innovation and Skills, and less than an eighth of the UK’s defence spend. The £116 per person net contribution is less than that from Sweden, Denmark, Finland, Germany and the Netherlands.