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EU Referendum - Impartial Advice from the IGA

EU Referendum - Impartial Advice from the IGA

27 May 2016

Across the referendum debate, the official Leave and Remain campaigns have been asked various questions from different groups as to how remaining or leaving he EU will impact small businesses.

Below we have complied a number of frequently asked questions and responses provided by Britain Stronger In Europe and Vote Leave.

Skilled Labour

If the UK remains in the EU how can we guarantee that small businesses have access to the necessary skilled labour?

Remain

  • Within the EU, small businesses can draw on skilled labour from across Europe with no visas, red tape or complications.
  • Were we to leave the EU, many businesses would find it harder to recruit the brightest and best to help them grow and create jobs.

Leave

  • After we Vote Leave, no one from other EU countries would be removed from the UK and no UK citizens would be forced to leave other European countries. The EU’s own Charter of Fundamental Rights prevents the collective expulsion of British citizens from the EU after we Vote Leave (CFR, art. 19, link).
  • We will have a sensible regime for the movement of people that allows us to replace the irrational immigration policy we have now.

Regulation

Remain

If the UK remains in the EU, will there be further reform on existing legislation to ensure small businesses can run their business?

  • There is a strong consensus between the European Commission and EU member states to reduce and streamline business regulation.
  • When the new European Commission started in 2014, one of its first actions was to scrap 80 proposed regulations.
  • It is vital for us to ensure that a strong British voice continues to be heard in the EU’s institutions to advance the interest of small businesses.

If the UK remains in the EU, what guarantee will small businesses have that EU decision makers will take small businesses into account when developing new legislation?

  • Research from the LSE has shown that the UK Government is highly influential in the EU advancing its position 87% per cent of the time. Its positions on red tape and business regulation are informed by the views of small businesses and the government has driven forward the EU’s better regulation agenda which has been advanced by Commissioner Frans Timmermans.
  • There are also small business membership organisations at EU-level, where small businesses can engage to ensure their voice is heard by EU policymakers.
  • The European Commission is ready to listen to small businesses, and has made cutting business regulation one of its key priorities.
  • If we left the EU, Britain would no longer enjoy this vital influence, but we would still have to comply with EU regulations in order to trade with the single market. We would be rule takers, not rule-makers.

Leave

To what extent will SMEs have to comply with EU rules after we Vote Leave?

  • There is no need for Britain to impose all EU rules on all UK businesses as we do now, any more than Australia or Canada or India imposes all EU rules on their businesses. British businesses that wish to follow Single Market rules should be able to without creating obligations on everybody else to follow them. The vast majority of British businesses that do not sell to the EU will benefit from the much greater flexibility we will have.
  • After we vote to leave, we will expand the number of damaging Single Market rules that we no longer impose and we will behave like the vast majority of countries around the world, trading with the EU but, crucially, without accepting the supremacy of EU law.

What EU legislation is likely to remain in place after we Vote Leave?

  • Section 2 of the European Communities Act 1972 that enshrines the supremacy of EU law. It must be repealed but it does not make sense to do this immediately.
  • Changing this is entirely a matter of UK law and what Parliament decides - this decision cannot be overruled by Brussels.

Reality

In the event of Brexit, the EU rules that UK small businesses would have to comply with would be dependent on the trade agreements reached by the UK Government and the EU.

In reality, nobody really knows what EU rules the UK would end up keeping or removing. This is partly because this is an unprecedented vote, partly because it will be dependent on the new trade agreement and partly because the current government and official opposition are campaigning to remain in the EU. This means that as of yet, there has not been a statement of intention of which laws will be repealed or left in place if the UK leaves the EU.

If the Norway model or Swiss models were replicated, regulations such as the Rules of Origin would have to be maintained. However, if the UK opted for a World Trade Organisation agreement, EU regulations may no longer be applicable and thus repealed.

Economy

Can you provide small businesses in the UK with information on the impact to the UK economy of either leaving or remaining within the EU?

Leave

  • Since Britain joined the EU in 1973, we have paid over £500,000,000,000 into the EU – that’s half a trillion pounds, or one third of our national debt.
  • Over the past decade alone, Britain paid over £150 billion to the EU budget. We send about £350 million to Brussels every week.
  • If we Vote Leave on 23 June, instead of sending £350 million per week to Brussels, we will spend it on our priorities like the NHS and schools. We may also be able to introduce tax cuts.
  • On top of this, EU regulation costs UK small businesses over £600 million every week. If we Vote Leave and take back control, we can reduce this regulatory burden as well… as a happy by-product of the process described above.

Remain

  • Analysis by Treasury officials has shown that the hit to our economy if we left the EU, of around 6% of GDP (by 2030), would create a £36 billion hole in the public finances. Closing that gap would mean less money for our public services and higher taxes on businesses. That would raise costs for small businesses across the country, leaving them less money to invest, and making them less competitive if they wanted to export.
  • Leaving the single market would leave the average family worse off by £4,300 per year.
  • The IMF, OECD, HM Treasury, Oxford Economics and others have all already warned about the damage to our economy if we left the EU.

Reality

Full Fact, the independent and non-partisan organisation, provided their insight on the information that both Vote Leave and Britain Stronger In Europe provided in regards to the UK’s economy.

Full Fact states:

  • Experts on both sides agree that the impact of leaving the EU on the UK’s economy would be much bigger than what we save on the membership fee—regardless of whether they think it would be a positive or negative impact.
  • Nobody knows for sure what the exact impact of remaining or leaving will be for businesses, and the exact circumstances will depend on what [trade agreements] are negotiated after the referendum. But most economists seem to agree that leaving the EU would cost the UK economically.
  • For example, every year the Financial Times surveys a group of over 100 economists. This year, three ­quarters thought that leaving would reduce the size of the economy in the medium term compared to staying in. Fewer than one in ten thought it would improve growth prospects.

Full Fact analysis:

Stronger In leads with an estimate from the Treasury that leaving the EU means the economy will be 6% smaller in 2030 than it would have been if we stayed in, impacting on the public finances and so potentially meaning a knock­ on impact for business.

This is based on modelling the UK entering a trading relationship with the EU similar to what Canada currently has. There is no guarantee the UK would enter this specific set of arrangements. This will depend on what is negotiated after the referendum and what economic policies the government adopts.

While the specific number is not a helpful prediction, the research does give a sense of direction that many but not all other economic analysis would agree with. It indicates that the closer the UK’s trading relationship with the EU, the smaller the negative economic impact of leaving.

The Leave campaign focuses on our membership fee, and say we send £350 million a week to the EU, or £500 billion in total since 1973—money which could better be spent on the NHS or possibly cutting taxes.

This claim is wrong. The figure does not include a rebate, or discount, on what the UK has to pay. So rather than paying £350 million a week, it’s more like £250 million. The figure of £500 billion since 1973—which factors inflation in over this period—has the same problems. The UK gets money back as well in grants and payments from the EU, although we do not control where these are spent. Some flow through the public sector, and mainly go to support farmers and poorer areas of the country. On net, this reduces our contribution to £160 million a week. More money, such as research grants, goes directly from the EU to the private sector.

EU Referendum Report

The IGA has created a detailed report about the EU Referendum in case you would like to read further. The report impartially analyses the ‘Remain’ and ‘Leave’ arguments on issues relevant to independent garages as SMEs, and includes an assessment of both sides’ points on each area.

The report covers how small businesses could be affected from both outcomes on the following topics:
If you have any further questions relating to the EU Referendum or how your business could be affected, please call the IGA member helpline on 0845 305 4230.

  • Free trade
  • Small businesses
  • Regulation
  • Employment
  • Economy
  • Cost
  • Finance and financial services

If you have any further questions relating to the EU Referendum or how your business could be affected, please call the IGA member helpline on 0845 305 4230.