What would EU exit mean for north east businesses?

Whatever business you are in and whatever your target market, you can’t escape the fact that external factors will have some impact on your business.

So it was with interest that I attended the North East Chamber of Commerce event ‘Brex-it or Brex-in’. Surely that should be ‘Brexit or Brin’?

Here are my reflections on the subject:

What are the key factors?

As was effectively demonstrated at the event, the economics of the matter are uncertain. Partly because economics is a bit like that anyway. But specifically because with EU membership there are too many inter-related factors at play, with each partly controlled by people, who have a variety of competing interests.

Some key points that I took away though:

  • If Scotland were to vote ‘in’ and the rest of the UK voted ‘out’ then it would be entirely legitimate for each to seek to get their wish (which would have to be via another referendum on UK break up).
  • If the UK exited the EU then a new frontier would exist at the Northern Ireland border. Rather than dividing two separate states within the EU, this border would then be a frontier of the EU. This must change the nature of that border. Questions need to be asked about how this would impact us and what it would do to historically difficult relationships in that area.
  • Whilst the economics are not certain, it is true that trade agreements typically do not include services. Services make up most of the UK economy. So how sure are we that our future trade deals would allow unhindered trade in our services?

Stop asking for the facts!

Seriously, there are no facts. Facts only exist where consequences are certain. Like it or not, the best we can hope for from those speaking on the matter is good judgement and honesty. But not facts.

What we do have are forecasts and assertions about potential consequences which would arise depending on the actions of people in the future. Of course people are not rational at the best of times. So decision makers balancing personal, national and international interests are even less predictable.

In any case, who would be the unbiased providers of the facts? The politicians? The media? The 1% of UK businesses that are ‘large’? Come on!

What else to consider?

From my point of view, the overriding factor is this: Isolationism is dangerous. Regardless of how ‘big’ and ‘strong’ our economy is, it is not made any better by isolating ourselves. Think about how our economy became ‘big’ and ‘strong’ in the first place.

Of course, trade will continue if we leave the EU (on terms as yet undefined). But the arguments for exit do come across to me as isolationist. When in history did isolationism ever do a country any good?

Stating that we prosper when we cooperate does not involve demeaning the strength of our nation. It’s just true that the most common source of economic growth is trading externally.

I’m generally in favour of cooperation and collaboration, providing it can be done on a fair and level playing field, with openness about motives and actions. On the other hand, no-one would create the EU in its current complicated form now if they were starting from scratch.

How were the ‘for’ and ‘against’ cases presented?

The choice of speakers at the Chamber event was very good; a politician and a business person on each side. A range of rhetorical styles was employed; from detailed story telling that illustrated wider consequences to shouty rhetoric appealing to unstated underlying values that many people share.

I couldn’t help noticing that if you are going to implore the audience not to believe the ‘scare stories’ of the other side … it’s best not to precede this with … a scare story!

A point made on the ‘exit’ side was that the savings made from no longer being burdened with the net contribution of the UK to the EU outweighs the tariffs that would likely be erected once we are outside. This goes back to economics again. But the thing it misses is that tariffs are paid directly by individual companies. So the two things are not comparable. Tariffs are more immediately harmful to a company than small macroeconomic changes.

A lot was made about ‘EU law’ taking primacy over UK law. But this really only applies to trade and the things that go towards ensuring fair trade. We have freedom to do our own thing on ‘justice and home affairs’. The only exceptions are the kind of human rights standards that we used to lead the way on and should really, if properly understood, be incontestable to most reasonable people.

How will it affect my business?

Well, either leaving or staying could be good for marketing companies including mine. It depends upon how optimistic potential clients are about the outcome they expect and how likely they believe this outcome to be. Because what really matters is business confidence.
So, there we have it. No facts but a range of alternative futures to consider. A choice of which criteria around economic and emotional issues you decide are most important.

We will get by either way.

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