Published on February 13th, 2013 | by Lewis Parker
Within EU, without EU
As David Cameron promised a referendum on the UK’s membership of the EU, business leaders are still divided. At stake is how much the UK really benefits from being in the European trading bloc, and whether the complex regulations are a price worth paying.
For Stuart Miller, CEO of locker-based logistics firm ByBox, it’s no easier for him to trade within the EU than with a country like Israel. As he said on BBC’s Newsnight. “My point was more around the fact that it was just as difficult to expand in Israel as it was in an EU member state (it doesn’t seem to be easy anywhere!). The main issues for us centred around things that really should be easier in a single market.
“For example, how do you submit a bill to the customer without contravening local VAT regulations? We paid for very expensive legal advice from the London office of a top-four firm. We structured the billing exactly as instructed. It was wrong. It then took us 18 months to get it right (with more eye-popping fees from a different firm) until we finally got the VAT back.”
Miller explains that he had no such problems doing business in Israel, but despite sitting with the Eurosceptics, he acknowledges that the problems could, ironically, be solved with more EU integration, even if practically untenable. “I’m not arguing for an integrated fiscal platform – that would be utterly unrealistic. But surely to goodness we have to make it easier to tell entrepreneurs how to open in a territory and submit an invoice without breaking VAT rules?”
In Mansfield, car-parts manufacturer BM Catalysts’ commercial director Mark Blinston is concerned about leaving the EU, since it would make trade more difficult. The UK could be turning its back on its largest trading partner, from which competition is already high.
BM is being hit from within the EU, and not from Brussells bureaucracy. Namely, from recession-hit countries like Spain where the cost of labour has decreased.
“We are worried. Economic changes in another market can really have an effect on you,” Blinston told the New York Times. New export orders for UK businesses have decreased for 13 consecutive months, perhaps as a result of sickness within the Eurozone.
Leaving the EU would be especially bad for tech start-ups, according to Russ Shaw of the Tech City Advisory Group. “In a world where technology is breaking down the traditional barriers to international trade and the internet is creating an ever-expanding global marketplace, UK businesses simply must not find themselves on the sidelines of the action and disadvantaged by punitive excise taxes,” he wrote in the Huffington Post.
“We should not forget the other benefits EU membership brings to those small businesses, particularly in the technology sector. A recent CBI report highlighted that over 45 per cent of employers envisaged they will face problems finding staff with science, technology, engineering and maths (STEM) skills in the next three years and that skill gap is most painfully felt by tech start-ups.
“The EU’s free movement of labour enables British businesses to recruit the top talent from across Europe and to compete in the modern global knowledge economy. Gaining access to this talent, if it is in short supply in the UK, brings both STEM skills and probably a better understanding to a variety of new markets into which these tech businesses can quickly expand.”
One thing all agree on, is if the UK stays in, it has to be a leading voice in the EU, rather than shouting from the sidelines. But David Cameron’s successful renegotiation of the EU budget may have backfired. His celebrated 3 per cent budget reduction includes a massive cut to spending on infrastructure; in particular, the drive for faster broadband.
By slashing the broadband funding from $9.2bn to just $1bn, the EU’s target of providing 30Mbps broadband for every EU citizen looks all but impossible, admitted Neelie Kroes, the European Commissioner for Digital Agenda. Something which will, ultimately, leave not only the UK but the whole EU flailing against the super-connected Asian markets.