The Prime Minister came to the City last week to address a packed room full of senior business leaders as part of a World Economic Forum event. Here he helped dispel nine of the myths put forward so vigorously by the Leave campaign as to why we should exit the EU. Here are my views on why the City backs up the counter arguments he put forward rebutting each point.
Myth one: only a small number of businesses actually trade with the EU. The UK has thrived because of our openness to trade and the EU is the most important destination for UK exports of financial services, generating a trade surplus of £18.5bn.
Myth two: if we weren’t in the EU, we could create our own rules. Most people can’t use the word “regulation” without putting “European” as a prefix to it, yet a large chunk of regulation is domestic in origin. And in fact most of the post financial crash regulation was actually agreed by the UK at G20 level.
Myth three: the EU needs us much more than we need them. While it is true that the UK acts as a gateway between Europe and wider international markets, we also need to easily trade within the Single Market via the passporting regime – a huge market right on our doorstep of 500m people.
Myth four: the Norwegian, Swiss or Canadian model will work for us. Quite simply none of these models is suitable for the UK’s economic relationship with the Single Market, and the Swiss and Canadian models do not include financial services.
Myth five: we don’t need trade deals and we’re just going to get our seat back at the World Trade Organisation (WTO). As the Prime Minister put it, membership of the WTO is not the nirvana some might think it is because of some of the possible tariffs that we would face.
Myth six: we can negotiate our own trade deals with the rest of the world. The EU has over 50 trade deals and I’m not sure we even know who the last person in the UK was to work on such a deal.
Myth seven: industries like financial services and manufacturing will thrive if we leave. No financial trade body has come out in favour of leaving, while the chairman of the manufacturers’ organisation, the EEF, has called Brexit akin to walking into an “abyss of uncertainty and risk.”
Myth eight: economists are split over this issue. It actually took until the end of April for the first report backed by economists to be published advocating Brexit. It had the backing of eight economists who differed in their thinking to the likes of the OECD and IMF.
Myth nine: there might be a short-term shock, but there will be a longer-term benefit. There is one thing that the City likes: certainty. Why should we take such a risk?
Cameron’s speech did a great job in helping to divide fact from fiction in a lot of the economic material the public are bombarded with on the debate. We need more businesses, as others like the CBI have been calling for, to speak up and voice their views.