Economic arguments

Forecasts

Business views

We have looked at the views and findings of 4 major business organisations on the question of staying in or leaving the EU

• British Chambers of Commerce (BCC)
• Confederation of British Industry (CBI)
• Federation of Small Business (FSB)
• Institute of Directors (IoD)

and summarised their views in the following table:

It is interesting that 3 of the organisations are not favouring one side of the debate or the other, even just on the economic case.  They see their role as ensuring that members have good information on which to judge the issues and helping them whatever the outcome.  The IoD points out that there will be much work to do whatever the result of referendum, either in setting up new agreements if the UK decides to leave or pushing for continuing EU reform if we decide to stay.

Please let us know if you think we should include the views of other business organisations or groups of business people in this table.

There are also a number of other business groups or business leaders who have either been surveyed or have expressed their views:

• 306 business leaders signed a letter, in their personal capacity, backing Brexit.  They include a founder of Superdrug and the former European VP of Sony as well as businessmen from small and meidum businesses
• 14 UK private technology companies each of whose worth is estimated to be more than $1bn were surveyed: 5 are in favour of remaining in Europe, 3 said they were neutral and the other 6 did not comment.  None said they were in favour of Brexit

Payments to EU

The very useful chart below from FullFact shows the best estimate of net cost to the UK of being a member of the EU.

This shows it was £8.5bn last year, which works out to £160M per week or £23M per day.

The £4.5bn money back from the EU includes only money paid back to the pubic sector (central government and regions).  There are also EU payments directly to the public sector: research grants to private companies are estimated at £1.4bn

The question is whether membership of the EU is worth this net payment?

(See FullFact’s page on EU Membership Fee for more detailed explanation and also a chart showing the growth of the membership fee over time)

Economic forecasts on the effects of BRexit

The three reports summarised below all calculate the economic effect of leaving the EU but do not include any upside for enhanced trade with countries outside the EU.  However, as at 19th April 2016 there seem to be no clear suggestions from the Leave campaign on what enhanced trade there would be.  So it is difficult even for economic forecasters to make predictions!

London School of Economics Centre for Economic Performance Report (“The Consequences for Brexit on UK trade and living standards“)

Their analysis suggests that UK GDP (Gross Domestic Product) would fall by 1.3 – 2.6 % in the case of BRexit.  This is equivalent to £850 – £1700 per household.  Note this is the amount we produce per household and is not the same as the amount of money each household receives in income – that would be a drop of a smaller amount.  The loss to the UK GDP  is £26-55M while the loss to the rest of Europe is £12-28M.  They also reckon that the loss of trade will reduce productivity.

(LSE funded by UK Economic and Social Research Council with less than 5% coming from EU)

PwC report commissioned by the CBI (“Leaving the EU – Implications for the UK Economy“)

UK GDP forecast to be 3 – 5.5% lower in 2020 if UK leaves the EU.  By 2030 this would be between 1.2% and 3.5% lower.  Unemployment would rise to 7-8% in the case of BRexit but would return to 5% by 2030.  Note that they predict that GDP per capita would still go up in the case of the UK leaving, just by a lesser amount.

Treasury forecast

GDP in 2030 would be reduced by between 4% and 7.5% if the UK exited the EU