By Sarah Hathaway, head of ACCA UK
Membership of the European Union has been an issue the accountancy profession has made little noise about and it’s viewed as a political issue. However, EU membership is an economic matter which is why here at ACCA we feel an obligation to take a view on membership.
The Deputy Prime Minister Nick Clegg MP described leaving the EU as “economic suicide.” He is right. But why do we care? Because accountants, perhaps now more than ever as we emerge from a global recession, have an important role to play in the recovery, future growth and in guarding against future risk to the UK’s economy.
Accountants traditionally look at the numbers, and they paint a convincing picture of why the UK should not back out of the EU. However, the profession is seeing its role and remit broadening into a much more strategic, forward-looking role in business and from that perspective too, giving up on the economic European Union would be bad news for UK plc.
ACCA sees staying in Europe as a no-brainer, and we aren’t alone. Nissan’s chief operating officer Toshiyuki Shiga has pointed to the major benefits for foreign investors in the UK being part of the EU. As Nissan owns the biggest car factory in Sunderland, employing 6,100 people, and is supported by UK supply chains that employ even more, Shiga’s comments should not be ignored.
Leaving the EU is also bad for the smaller businesses further down the supply chain. SMEs would actually benefit greatly from an even more integrated European Union. SMEs could increase export trade by 45 per cent if the remaining barriers in the Union are lifted.
But this issue isn’t just about trade. It’s about people.
Chief finance officers tell us that overseas experience will be a vital skill for tomorrow’s finance leaders. That sentiment fits with ACCA’s qualification – an exportable asset. You can study it in the UK and take the qualification to the Czech Republic or other markets (and vice-versa). In the EU, that mobility is made easier by free movement of people laws.
The UK benefits from being able to access talent from across Europe – employees bring with them market knowledge and close links with clients, customers and other stakeholders. This cultural connection is vital in a global business world.
The EU is also a vehicle for social mobility. ACCA is guilty of repeating the same messages around social mobility, but can you blame us? Since our infancy in 1904, social mobility has been the central principle of our qualification. Who you are and where you come from is no obstacle to the ACCA Qualification. That social mobility principle also applies in the EU.
Social mobility can include upward progression across Europe in finance and beyond, as well as within the UK? Cutting that continental option off and confining social mobility to within the UK’s shores is strangling that upward mobility.
This isn’t just about the current workforce either. Opportunities for Britain’s younger generation won’t be there if major employers have to leave the UK. Where will they get work – Europe? That won’t be so easy if the UK throws in the towel with the Union.
And if jobs and social mobility aren’t concerns for some, perhaps the numbers – more familiar territory for the accountancy profession – can paint a more convincing picture as to why a UK out of Europe is a bleak place.
The EU is the largest economy in world, worth £11 trillion, ahead of the US (£10.3 trillion) and China (£5.4 trillion). Nearly 34 per cent of world trade originates in Europe, worth around £3.5 trillion annually. The EU is also the top trading partner for 80 countries.
UK companies benefit by £500m a year, while 50 per cent of foreign direct investment to the UK comes from other EU member states. Over 40 per cent of UK exports go to the EU and they are tariff-free. More than 300,000 UK companies operate in the EU.
The EU-US trade deal is expected to generate €80bn (£67.7bn) worth of benefits for the EU and create 2m jobs. The EU-South Korea Free Trade Agreement saves EU exporters £1.35bn annually in tariffs.
Amidst the emotional scaremongering about the EU’s threat to British culture, the figures paint a clear picture that big business, overseas investors, small business and UK employment stand to lose if we drop out of the EU.
It’s difficult to ignore the arguments for staying in Europe. The consequences of leaving will hit the UK hard.
This first featured in City AM, October 2013