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Will Britain stay in the EU? Suppliers should locate the Brexit

By: SA Mathieson
Published: Monday, September 1, 2014 - 07:39 GMT Jump to Comments

A British exit, or Brexit, from the European Union in a few years’ time looks increasingly possible. It is worth thinking about what it would mean for your business.

In just over a fortnight's time, Scotland will vote on whether or not to leave the United Kingdom. Although the polls suggest that Scots will reject independence, the only poll that counts takes place on 18 September. Any business which may be affected will be paying close attention.

In the next 40 months, Britons might vote in favour of leaving the European Union. After last May’s European elections, David Cameron repeated a promise to renegotiate powers with Brussels, followed by a referendum, by the end of 2017 if he is still prime minister. Businesses should be planning for this possibility.

On the face of it, a Brexit needs the less likely result from two sets of voting. Labour looks more likely to win the general election than the Conservative party, and a YouGov opinion poll last month found that 54% of Britons would vote to stay in the EU after Mr Cameron’s renegotiation, with 23% against.

But this underplays the chances. Firstly, the other parties may decide to match the Conservative offer as the election approaches, particularly given the popularity and profile of Ukip, which is likely to be boosted by Douglas Carswell's election as its first MP following his defection from the Tories.

Secondly, the result quoted is for YouGov’s supplementary question on the EU, which asks how people would vote following a successful renegotiation and a prime ministerial recommendation to stay. Its initial question, on how respondents would vote in an EU referendum without mentioning these steps, found just 40% in favour and 38% against.

And Britain is likely to struggle to regain powers from the EU. The countries using the euro are talking about more integration, not less, as a way to guard against future financial crises. Informed commentators including David Charter and Wolfgang Munchau have concluded that this process alone is likely to move Britain towards some kind of Brexit, whether a complete departure, or what Mr Charter calls ‘EU lite’, a yet-to-be invented lower level of EU membership.

Any change in Britain’s EU status would affect public sector suppliers, and is therefore worth considering potential impacts. One could be changes to, or the end of, the Ojeu process for large public sector procurements. Given the cost of compliance, many suppliers would welcome changes – as long as its replacement was transparent as well as leaner.

A Brexit could see significant new government work, particularly in policy areas currently dominated by Brussels; this could also apply to a successful renegotiation. For example, an exit from European agricultural and fishing policies would require the Department for Environment, Food and Rural Affairs to undertake substantial new work, as ministers would have to make far more decisions. In this area and others, there would also be more work for the devolved administrations in Cardiff, Belfast and Edinburgh – the last depending on the result of next month’s vote.

International suppliers could see themselves shut out of work elsewhere in the European Union; the impact on businesses with multinational supply chains such as vehicle manufacturers is one of the best arguments in favour of staying in the EU. Firms providing services, including suppliers to the public sector, would probably be much less affected, as the EU has made much less progress on a single market for services than for goods.

An intriguing possibility would come from a post-Brexit Britain’s ability to negotiate its own trade deals, currently an EU prerogative. Deals with Britain’s Commonwealth allies could be particularly beneficial to public sector suppliers, as services that work here could work with minimal tweaking in English-speaking countries with similar systems of government.

Unlike perhaps Scottish independence, a British exit from the EU is not going to be triggered next month, but it is a distinct possibility over the next few years. Its dangers and opportunities are worth considering.

YouGov poll for The Sun on European Union referendum (August 2014, PDF)

Video: Queen’s Award winner Mechatherm International calls for the UK to stay in the EU (TheInformationDaily.com, July 2014)

David Cameron pledge on EU referendum (Guardian, May 2014)

Unnecessary red tape to be cut in EU clinical trials (TheInformationDaily.com, December 2013)

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.

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