LONDON Jan 17 Prime Minister David Cameron's
bid to redefine Britain's relationship with Europe risks
stalling foreign investment and throttling the growth of many
companies, leading business figures have warned.
Cameron will deliver a speech in Amsterdam on Friday setting
out his plans for Britain's future in the European Union, which
is expected to focus on wresting powers back from Brussels.
Executives such as Martin Sorrell, who heads the world's
largest advertising company WPP, and Mike Rake, chairman
of BT and easyJet, said they understood Britons'
frustrations with the EU, but warned that diluting the
relationship could backfire and end in Britain leaving the bloc,
its main trading partner.
That would make Britain a less attractive place to do
business, they said.
"This is not political, or intending to be a threat," Rake,
who is also deputy chairman of Barclays, told Reuters.
"This is a reality of how businesses have to operate.
"If businesses in Europe or outside, who look upon the UK as
a more practical, pragmatic, flexible environment in which to
work, if they feel that the thing is beginning to spin out of
control politically, then of course they will start to say hang
on, we ought to wait."
Facing growing Euroscepticism at home and in his own
Conservative party, Cameron will set out his plans for Britain's
future in Europe in a long-awaited speech in Amsterdam on
He is likely to identify major policy areas where he wants
to claw back powers - such as employment, social and criminal
law - and then offer a referendum, possibly in 2018, to vote on
the new terms.
Some are pushing for a referendum that could, if the "no"
vote wins, end Britain's 40-year membership in the club, leaving
the world's sixth largest economy to deal with the EU on similar
terms to outsiders Switzerland and Norway, which have to follow
much of the bloc's rules but have no power to influence them.
With polls showing a slim majority of Britons favouring an
exit, critics, including many in the business community, say
Cameron's tactics constitute a huge gamble.
"Uncertainty is the enemy of investment," said Vince Cable,
business secretary from the pro-European junior coalition
partner the Liberal Democrats. "This is a terrible time to have
the diversion and uncertainty which build-up to a referendum
All the executives who spoke to Reuters were sympathetic to
Cameron's situation in that they want to see the bloc reformed,
but they believe it is far better to do so from within the
27-country group than risk finding Britain on the outside.
"We're not going to be able to do anything if we're just sat
there like Norway and Switzerland." Sorrell, chief executive of
WPP, which has a market capitalisation of around $19 billion,
Senior City figures have been quietly warning Cameron's
aides about the "catastrophe" that would unfold if Britain were
to exit the union, pointing out that international banks in
London rely on a passport from regulators to trade into the EU.
One senior City figure who asked not to be named said
Cameron's recent statements had raised real concern for him and
his fellow bankers, because they feared the prime minister's
high-stakes rhetoric would further damage London and leave it
"People are looking at it and saying, 'Would I be better off
having my regulated entity in Frankfurt?'" he said.
At risk, critics argue, is around half of Britain's overall
trade and foreign investments, the 3.5 million jobs that are
linked to the export of goods and services to the EU, and a loss
of influence in the wider world.
Some of the most outspoken comments in the business
community have come from the auto industry, a sector that is
still rebuilding from the shock of the financial crisis and
which relies on European demand.
"Quitting the EU could be dangerous for Bentley," said
Wolfgang Schreiber, CEO of the Volkswagen unit.
"Such a move would probably inflict additional costs on our
business through customs fees and also on our cross-border
dealings with international suppliers.
"The UK auto industry is just rebounding. The British
government is aware of that, and I can't imagine they would be
willing to put that positive development at risk".
Ian Robertson, global sales chief for BMW, said
Britain needed to remain a "strong and active member of the EU".
Not only are leading members of the business community
concerned by the subject of the debate and where it could lead,
they are also increasingly alarmed by the tone.
"Grandstanding is not going to endear us to other members of
the club," said Sorrell. "There's a danger that we make too much
noise about it, and they'll say, 'This is it, take it or leave
With the debate around Europe often led by the more extreme
eurosceptics in Cameron's Conservative Party, who characterise
the EU as faceless bureaucrats imposing rules and regulations at
will, the executives said they decided to speak out as few were
making the case for Europe.
Some in the City of London might well have been reluctant to
speak up, since many Britons give short shrift to the financial
sector, which they blame for causing the financial crisis and
subsequent recession and austerity measures.
Former prime minister Tony Blair, who sought closer ties
with Europe during his 10 years in power but shied away from
signing up to the single currency, has called on business
leaders to campaign harder against a possible EU withdrawal.
"In this new world, to leverage power, you need the heft of
the EU. It gives us a weight collectively that on our own we
lack," he said in a speech late last year.
"Any U.S. president I know would regard Britain leaving as
folly. The idea we would then seek new relationships with the
likes of China and India is an especial illusion."
However, not everyone is convinced that speaking out in
favour of Brussels is the right way to go.
John Longworth, the director general of the British Chambers
of Commerce, which represents firms employing over 5 million
people, said Britain could no longer stand still in Europe as
the rest of the bloc integrated.
"There are businesses that are feeling that they're being
made uncompetitive in the world market by the weight of European
legislation," he said.
"Europe needs the UK because it over trades with the UK. We
have actually got an extremely strong hand. And to have a
negotiation, the other side has to believe that the prime
minister is prepared to walk away."