Bad for business

The British general election on May 7 looks set to produce a hung parliament with no clear majority. With all parties dedicated to continued public spending cuts, one issue divides voters, business and the parties more distinctly than any other: Europe.

David Cameron's Conservative party has guaranteed an in-out referendum on Britain's continued EU membership by 2017 in the event of a Tory victory. Ed Miliband's Labour has ruled out an EU plebiscite unless a major transfer of powers from London to Brussels is proposed - a scenario unlikely enough to discount out of hand.

Cameron was forced into offering the referendum by the fractious right-wing of his party and the rise of UKIP, which has conflated EU membership with immigration - a genuine touchstone issue in this campaign - in 2013. It was also a bid to appease the press, which sees Brussels as wielding an undemocratic influence on British life.

That offer may now have backfired as the election draws near, and business leaders and political rivals say the uncertainty of Britain's position could hit jobs and trade, while most voters are in favor of staying in the EU.

Business concerns

Pro-EU group Business for New Europe, which represents some of the biggest companies trading in the UK, including BAE Systems, Shell and Amazon, said the Tory promise of a referendum by the arbitrary date of 2017 is causing uncertainty among business leaders, putting investment at risk.

"If someone is making an investment, looking to set up production, for example, by opening in a factory in Britain, they are thinking 20 years ahead," said spokeswoman Lucy Thomas. "If there is a referendum looming, you can't be certain that we're going to be in EU. The fear of uncertainty is there."

Labour's long-standing anti-referendum stance was reiterated in its manifesto, published last week. "Labour's priority in government will be protecting the NHS and tackling the cost-of-living crisis, It is not to take Britain out of Europe," it stated, adding that a referendum would be offered in the event of major powers being assumed by Brussels. No other parties except UKIP, polling 7-10 percent, offer an imminent vote on EU membership.

‘Profoundly worrying'

Business leaders, though, are critical of the offer. Siemens chief executive, Juergen Maier, was quoted by the Labour party in a full-page advert in the Financial Times newspaper at the end of March, saying: "The prospect of a referendum that may or may not happen, at a date yet to be decided upon, with a choice between two unknown options, is profoundly worrying for business leaders."

The company complained at its inclusion, citing political impartiality and saying Labour had "overstepped the mark."

Positions have hardened following a recent speech by Tony Blair. The former Labour prime minister warned that a Tory victory and resultant referendum would result in a "pall of unpredictability hanging over the British economy."

"Think of the chaos produced by the possibility, never mind the reality of Britain quitting Europe," Blair said. "Jobs that are secure suddenly insecure; investment decisions postponed or cancelled."

Best for Britain

The Confederation of British Industry (CBI), the UK's leading business lobbying organisation, believes that EU membership is worth up to 5 percent of the UK's GDP ­- around £78bn a year. Katja Hall, CBI deputy director general, said EU membership was best for Britain - and for business.

"It is the clear view of most businesses across the UK that our economic future is best served by our continued membership of a reformed EU," she said. "Most CBI members believe that the benefits of EU membership outweigh the costs and will not shy away from saying so."

John Cridland, director general of the CBI, said some reform was necessary, but agreed that most business leaders do not want to leave the EU. "Having access to the single market is fundamental to future jobs and growth," he said.

Lucy Thomas of NBE agrees that reform is vital, but says that promise of a referendum feels like a threat, rather than a negotiation: "No one is arguing that the EU is perfect and needs no reform, but frankly, is the best way to get that to go to your European partners and hold a gun against their head and say: 'If you don't meet our demands we're going to leave?'"

Non-issue for voters

Much of the politicking, though, seems to ignore the most relevant statistic - the latest polls show that EU membership is a non-issue for most voters, who care most about the economy, immigration, and healthcare. A majority - 46 percent - would vote to stay, up 11 percent since October, with only 36 percent saying they would vote to leave, according to Yougov.

Lee Henshaw, an advertising network owner in Hackney, east London, said his firm planned to expand into the EU in the coming year and that his vote would be guided by a desire to avoid a referendum.

"I'll be voting for any party that makes us more likely to stay in the EU. My company plans to expand into the EU in 2016, and I see EU membership as a net positive for staff and management," said Henshaw. "Talk of 'EU red tape' and 'compromised sovereignty' is a pseudo-respectable way of crticising immigration levels. But it's also often a way to deny workers fair pay and equitable treatment. A lot of EU legislation simply formalizes the things any good company should do."