Brexit makes no sense
The Chair of CBI Northern Ireland, David Gavaghan explains why leaving the EU will damage the economic position of the United Kingdom and in particular Northern Ireland.
In just over two months, one of the critical decisions of our time will be determined. Of the two competing futures – ‘In’ or ‘Out’ of the EU which will give the UK and in particular Northern Ireland the best prospects for prosperity?
The CBI is actively involved in seeking to inform the debate. Many people have sought to understand what leaving would look like. To shine a light on this issue CBI asked PwC to examine what would happen in the event of two different EU exit scenarios up to 2030:
• First an optimistic outlook – a trade deal is agreed swiftly with the EU;
• Secondly, a more pessimistic outlook – negotiations around an exit are protracted.
The economic evidence is clear – leaving the EU would cause a serious shock to the UK economy. The potential cost of leaving could be as much as £100 billion and nearly one million jobs by 2020 with negative echoes that could last for many years after that. Under both scenarios, UK living standards, economic growth and jobs will be significantly reduced compared to staying in the EU. Household income in 2020, for example, could be between £2,100 and £3,700 lower and the UK’s unemployment rate could be 3 per cent higher than if the UK remains in the EU.
Even in the ‘best’ case of an exit, there would still be a big hit to the UK economy. Whilst the UK would slowly recover over time, the economy would never quite get back to where it would have been if it had stayed in.
There are many other reports warning of the risks associated with leaving the EU. DETI has commissioned Oxford Economics to examine the potential impact of an exit from the EU on Northern Ireland. Its report indicates that our economy is likely to be more vulnerable to the type of structural changes triggered by a UK exit in comparison to the rest of the UK. Looking at various different models, Oxford Economics found that on average, by 2030, UK Gross Value Added (GVA) is 1.8 per cent lower than baseline across the nine scenarios. In comparison, on average by 2030, GVA in Northern Ireland was 2.8 per cent lower than baseline.
These findings help explain why the majority of UK businesses – small, medium and large – are in favour of remaining within the EU. An independent survey undertaken by ComRes for CBI members – who employ one third of all private sector employees across the UK – found that 80 per cent believe being part of the EU is best for their business and 77 per cent said it was better for the UK economy.
Every business survey has demonstrated support for remaining within the EU. Quite simply, this is the mainstream business view. At an appearance last month in Stormont before the Northern Ireland Affairs Select Committee, the CBI answered questions from Westminster MPs as to the economic advantages of staying within the EU. We made the economic case to remain in. Walking away from the largest economic market in the world, without a clearly articulated and attractive alternative, makes no economic sense and risks the future economic prosperity of every citizen on these two islands.
Being inside the EU benefits the UK economy by:
• giving a strong platform for firms to trade with Europe and the rest of the world;
• attracting investment to create jobs here at home;
• keeping prices lower for consumers on the goods and services we buy each day.
Exiting makes no economic sense. It risks throwing away the many benefits we gain from being part of the EU. Having our voice heard around the EU table is also likely to give the UK an even greater standing in the decades ahead. Responsible business leaders need to speak out for what is arguably the most important democratic decision of the last thirty years let alone the next thirty years. In just over two months the dye will be cast!
