03 February 2016 category: strategy & business planning
The imminent “deal” between the UK Government and the EU on reform makes an early referendum more likely (the legislation gives them up to 2017).
We are all being bombarded by sound bites from those on the pro and anti EU campaigns even before the facts are presented, so it is very easy to be turned off from listening to it.
It is, however, a vital decision, both from an economic and social point of view, so ultimately we will all have to make up our minds.
My impression of the debate is that most large businesses are pro-EU. This is probably because they benefit from export agreements and the like.
It also appears that most small businesses are either neutral or anti-EU.
However, the voting system is heavily in favour of small businesses in the referendum. Each citizen will have a vote. Businesses cannot vote, other than as a collection of individuals.
There are approximately 5m businesses in the UK; 300,000 are large businesses and 4.7m are small and medium-sized enterprises (SME’s). That means small business owners and managers have a large voting power.
The EU has changed dramatically since the UK’s entry in 1973.
- The UK joined the European Economic Community (EEC) which has now expanded its remit to include political and judicial union and is now called the European Union (EU).
- In 1973 the members of the EEC accounted for 13% of the world’s population. In 2015 the much expanded EU accounts for 7% of the world’s population. (In the same period, India increased from 450m to 1.2bn – the additional population being almost twice that of the EU.)
- In 1973 the EEC accounted for 37% of the world’s GDP. In 2015 the much expanded EU accounts for 22% of the world’s GDP.
- The Eurozone is growing at a much slower rate than the USA, China and the Commonwealth (which the UK abandoned to join the EU).
On the face of it, therefore, the EU is in decline. However, the picture is not as simple as that. The UK and China are huge economies in their own right and for developing countries, the opportunity for rapid growth is inevitably greater. The EU might, therefore, not be in decline, but simply growing less rapidly than other economies.
So what should Small Business Owners do in the EU referendum?
- Vote as a citizen AND a small business owner. This means that you will take into account legal jurisdiction, immigration issues etc. as well as economics.
- Consider whether having such a huge market “on our doorstep” really matters, regardless of any differences of relative growth with other parts of the world.
- Even if you do not export to the EU are you working with large companies that are exporting? Speak to them about the impact (if any) of the UK leaving the EU.
- Is there likely to be any financial “turbulence” if the UK left the EU or would there be a positive impact on the economy?
- In either case, would this be a short term or long term issue?
There is a lot to consider, as with any vote. The best thing to do is to listen to the arguments – on both sides – and do your best to form a view of what you think is right for you, your business and the nation.