Making EU reform relevant for growth and prosperity?
Now that the dust has settled following the British General Election, attention has turned to the referendum on the UK’s membership of the EU. The Conservative Party made a referendum on EU membership a cornerstone of their campaign and Prime Minister David Cameron has been quick to signal his intention to hold the referendum within the next two years.
Far from being an issue that concerns just the UK, the proposed referendum is likely to have repercussions all over Europe and could fundamentally alter the powers currently held by Brussels. At the heart of this plan is seeking alignment from a rainbow of different shades of UK’s terms of membership.
Most businesspeople would hope that high up David Cameron’s EU shopping list is to free businesses from red tape and “excessive interference”. And if there is one thing Small and Medium businesses can’t stand, it is bureaucracy and mindless regulation.
Just last year as part of the Sage Business Index, business owners from the UK, Spain, Germany, Ireland, Poland and Portugal told us that the biggest challenge they faced in their country was too much bureaucracy and legislation. It’s clear that the UK will find many allies across the continent in the fight to curb the powers of bureaucrats.
A 2013 report by Berwin Leighton Paisner estimated the cost of regulatory compliance in ten major economies to be around $1.2 trillion; disproportionately impacting Small and Medium businesses who end up paying more per employee than larger companies. A report by the US Small Business Administration suggested businesses with 20 employees or fewer pay as much as 36% more than their larger counterparts.
In addition, the UK could seek businesses access new markets through free trade deals with America, Africa and Asia. The fast-growth economies of China, India among others, have largely remained untapped by European businesses, while cracking the US is still seen by many as the height of aspiration.
While the EU has significantly improved trade between European countries, more needs to be done to support companies with ambitions both across the Atlantic and into the fast growing economies. This should include raising awareness of the growth opportunities in emerging countries, among businesses who have grown comfortable with the relative ease of trading inside the EU.
There is much to be applauded in the desire to reform.
It’s hard to refute that the UK Government is on the side of business – during the past 5 years, Government spending on small businesses has increased from approximately £3bn in 2010 to £11bn per annum today. If liberating businesses from bureaucracy and encouraging trade with the wider world are top of the UK Reform aims, then there is a strong prospect of wide business support across Europe.