Could the prospect of an EU referendum damage UK business? Some say a plebiscite is essential, others that it’s an unnecessary cloud on the economic horizon. Two Director readers debate…
YES While most supply chains are sufficiently robust to withstand a temporary dip in demand, there is concern about what might happen if the uncertainty surrounding the general election becomes protracted – if, for example, the party with the largest vote fails to form a government and a second election becomes necessary. Then, the prolonged uncertainty could create considerable business disruption and industrial supply chains might suffer. Some could even go out of business.
One election scenario that could create concern for businesses is the possibility of an EU referendum. The uncertainty surrounding the UK’s position as part of the European Union could impact on inward investment.
UK-based firms with strong trading links to Europe could also expect to see a dip in their order sheets. Those companies that are reliant on Europe for a significant part, perhaps even the majority, of their business would need to have contingency plans in place.
If an EU referendum is announced, an agile supply structure could allow them to shift their focus to alternative markets, or switch sourcing strategies in order to maintain profit levels. Some industries have also developed collaborative supplier initiatives – such as the Aerospace Growth Partnership – to provide long-term strategic plans to guide them through any prolonged period of political or market uncertainty.
Roy Williams is managing director of global procurement and supply chain consultants Vendigital
NO Opponents of a vote on our relationship with the EU are quick to claim it would create ‘uncertainty’ and damage business. Often this argument is used to mask outright opposition to any change whatsoever in the EU. But let’s be clear: doing business is about dealing with uncertainty and thriving nonetheless. It is the risk takers and pioneers who drive our economy forward, while those who stick with the status quo often find themselves overtaken by events. In fact, ‘political uncertainty’ is inherent in our democracy – and thank goodness for that. I don’t hear many calls to do away with elections despite the doubt that surrounds the outcome, so why should we fail to trust the public on this issue when they (and the majority of business leaders) believe we should have a vote?
The EU of today is not the EEC people voted for 40 years ago. Moreover, the future direction of the EU and the changes it must embrace means the idea that a referendum with a clear timetable is somehow increasing uncertainty is pure hokum. The solutions needed to fix the never-ending eurozone crisis make treaty change inevitable, which in turn makes the pressure for a vote irresistible.
Opponents of a referendum in 2017 are therefore arguing that rather than a vote with a clear timetable, we instead wait, and guess when further changes on the continent make the vote unavoidable. So which of those two options sounds the more ‘uncertain’?
Matthew Elliott is chief executive of campaigning group Business for Britain
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