The business case for a referendum on EU membership

IN ALL likelihood, David Cameron will soon commit to holding an in-out referendum on Britain’s EU membership. Unsurprisingly, this has provoked a campaign against giving people a say on who ultimately governs us.

There are two arguments. First, that “now is not the right time”, because speculation about the possibility of a referendum would create turbulence in the markets when the Eurozone is in crisis. Second, that if companies and investors thought we could leave, they would pull out of Britain.

With a few honourable exceptions, the pro-EU lobby react with horror whenever it is suggested that voters should be given the chance to vote. The reality is that, for such people, there will never be a “right” time. And the argument will become even more unsustainable within the next few years, when a forthcoming treaty puts the finishing touches to banking, fiscal and political union. Under this new arrangement, Eurozone countries will likely vote as a single bloc and, facilitated by extensions to qualified majority voting, could impose a raft of measures on Britain and other non-Eurozone members.

Even if our government assumes that it can negotiate opt-outs, it’s ultimately the European Court of Justice (ECJ) that interprets EU treaties. John Major thought he had an exemption from the working time directive under the Maastricht treaty, only to see it imposed on Britain later as single market legislation. Alistair Darling went to Brussels confident that the UK could not be obliged to provide billions towards Eurozone bail-outs, only to discover that the ECJ authorised Article 122, a provision meant to provide assistance to countries experiencing disasters, to be applied to non-Eurozone members.

The second line of attack – that business would flee Britain if there was a prospect of us leaving the EU – is similarly undemocratic in its implications. It is not just the supposed interests of big business at stake. All citizens will be potentially affected by the main locus of power transferring to Brussels. You can’t deny people the right to vote because they may not come to the conclusion you want.

In any case, it is far from self-evident that a Britain outside the EU would suffer. The World Trade Organisation has transformed the nature of world trade. A full 75 per cent of trade in goods is now tariff free. The Most Favoured Nation principle would, in any case, prohibit the EU from waging a tariff war against us – not that Brussels would want to do so, given its current trade imbalance and high unemployment on the continent.

And given the global shift in economic power from West to East, together with demographic and relative economic decline in Europe, UK businesses should be pragmatic and at least explore the possibility that there might be advantages to a different relationship with the EU. Just as there are potential risks to opting out, there will be risks to enterprise of us staying in. If taxation without representation is undesirable, so is regulation without rectification.

Lord Vinson is a former deputy chairman of Barclays Bank. He co-wrote this article with John Mills, chairman of JML Group, and Daniel Hodson, former chief executive of Liffe, and Jon Moulton, chairman of Better Capital. Sign the People’s Pledge for an EU referendum at www.peoplespledge.org