Popular support for Euro-scepticism is rising in the UK, but the trade and export community is at odds with voters over ‘Brexit’, writes Freddie Heritage.


The May European election results outlined in no uncertain terms that the political momentum behind anti-European populist parties is gathering pace. Nigel Farage’s UK Independence Party (UKIP) won 27.9% of the vote in the UK: one of the highest achieving Eurosceptic populist parties in Europe. As a result, the chances of the British electorate voting to leave the European Union (EU) in the ‘in-out’ referendum proposed by UK prime minister David Cameron for 2017, has become more likely.

Yet Britain’s traders and exporters are at odds with voters. According to May’s international trade survey results from Trade and Export Finance, 58% of respondents (nearly 3,000 of the country’s exporters) consider continued EU membership to be critical to their business.

A poll conducted by Delta Economics at GTR’s UK Trade and Export Finance conference in Birmingham recently, revealed that a staggering 81% of those trade and export professionals asked, were not in favour of a British exit (or ‘Brexit’) from the union. When asked what the most important factor was when considering EU membership, 54% said it was ease of access to markets.

Delta’s CEO Rebecca Harding believes British trade and export industry stakeholders have so far failed to demonstrate the value of EU membership to the domestic economy and to the lives of individuals. “The immensely emotive angle that Euro-scepticism captures is concerning for business, which stands to lose a lot without a close and straightforward relationship with the European trading bloc,” she tells GTR.

The cost of living

The Office of National Statistics found in 2013 that of the UK’s £492.8bn of exported goods and services, 45% remained in the EU. Europe counts for around 34% of all global trade and six of the UK’s seven largest export markets are European. 30% of UK trade is dependent on membership of the European single market, says the Centre for European Reform.

According to Delta’s data model, a 2017 Brexit would result in £425bn of lost trade as a result of having to renegotiate agreements with all European markets, by 2022. “That’s a huge amount for the UK to lose in five years. Per household that’s £6,700 per year, explains Harding.

Britain’s SMEs would arguably be most affected by the departure. “We would see as much as a 25% reduction in trade,” says Stephen Dootson, financial director at Stockport-based Hughes Safety Showers.

“One of our biggest customers is BP,” he adds. “We find that we work better with them in all the European markets where they have a presence. It is a large enough corporate to survive without the EU enveloping it, so it would make no difference to them if Europe fell apart tomorrow. For us, however, it’s unthinkable that Britain would leave the EU. The dropping of trade barriers just makes business that much more straightforward for us.”

Smaller companies looking towards exporting are the primary beneficiaries of global trading blocs like the EU, which harmonise compliance standards and allow for supply chain consistency. “As soon as our smaller companies want to go international we will be taking away their freedom not to comply anymore,” argues Harding.

What about the alternatives?

Few British exporters see any benefit to the kind of British isolationism promulgated by popular anti-European rhetoric, but the lack of a comprehensive understanding of possible alternative arrangements with Europe could be confusing the economic argument for continued membership.

Advocates of a Brexit do not see the trouble in re-negotiating trade deals with key European partners, but the Centre for European Reform finds all other forms of association would ultimately reduce Britain’s trade revenue.

Accepting ‘regulation without representation’ from Brussels, as Norway does as a member of the European Economic Area or Turkey does as part of a customs union, would not be welcomed considering interference from Brussels rests at the heart of the Brexit argument. Britain would more likely seek reciprocal access to the single market like Switzerland does, legislating with the EU in mind without the guarantee of being compliant with EU standardised regulation. Swiss access of the EU services market is limited to the parts for which it has brokered sectoral agreements.

“The Swiss case is interesting,” notes Harding. “Having to negotiate between sectors is enormously costly for them. And while it doesn’t cost the country as such, its costs businesses because they are having to renegotiate the bureaucracy to be compliant. It’s not straightforward.”

Passion vs pragmatism

The UK trade and export industry is concerned that the pro-business, pro-trade argument for continued EU membership isn’t being heard, and is being drowned out by impassioned Eurosceptic rhetoric about jobs and personal financial security.

SMEs are lobbying government through bodies like the All Party Parliamentary Group for Trade and Investment, but relaying the message to the voting public is another story: “We do our best to make businesses see that staying together is better for all of us and the idea of independence is not backed up economically, but ordinary people need to be made aware of what we’ll miss from the EU,” says Dootson.

“People forget they are employed by businesses,” explains Harding. “Taking us out of Europe creates a whole raft of uncertainties that businesses can’t calculate. You can’t hedge against it because you don’t know what the size of the problem will be.”