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| October 23, 2018

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How does the EU Referendum affect YOU?

How does the EU Referendum affect YOU?
Rhys Wilson - Plant

Why have we got a referendum?

In the previous general election, David Cameron came under increasing scrutiny by his backbenchers and the general public, demanding a referendum on whether we stay in or leave, with even some Conservative voters shifting right to UKIP.

David Cameron embarked on a mission across many EU capitals, in an attempt to renegotiate Britain’s position in the EU, resulting in a summit in February. David Cameron insisted he would strive to keep Britain in a “reformed” EU, but members of his own party want to leave.

Come June 23rd, a vote either way is a huge decision for our way of life.

The Low Down

In the past weeks, many of you have received leaflets through the door from the Government about staying in Europe, claiming 3-4 million jobs are linked with the EU, and that these would cease to exist following an exit from the EU. However, the EU Jobs Myth paper states that “jobs are linked with trade and not membership to a political union.”

Perhaps the biggest argument for pro EU folks is the affect that leaving may have on trade. Being in the EU allows the UK to be engaged in a single market of some 500 million people where there are no tariffs on imports or exports. Around 50% of Britain’s exports go to the EU and leaving could affect those sales.

Interestingly, Britain’s exports have slowly decreased over the years, whilst trade with the US and the rest of the world has increased. Many people believe Britain can strike up deals with these parts of the world whilst trying to keep trade with the EU.

Leaving the EU would immediately save the UK £13 billion in EU contributions, but the UK also receives £4.5 billion of spending according to Full Fact. That’s a saving of £8.5 billion a year, which according to The Week, is around 7% of what the government spends on the NHS every year.

This in turn can affect investment as certain companies that manufacture in the UK may want to move into another EU country so they can transport goods tax-free to other EU countries. The result of this could be a loss of jobs which would possibly affect low-income families.

In respect to security, many are thinking things will degrade with an exit, but nothing will affect Europe’s relationship with Britain and the EU within security. The sharing of intelligence is mutually beneficial to the safety of civilians across the world.

The biggest dilemma is that no one has ever left the EU before, so the results are hard to estimate. The think tank, Open Europe estimated that the worst scenario for Britain’s economy would be a loss 2.2% of its total GDP by 2030. To put that in comparison, the UK’s GDP was rocked 6% in the 2008/9 recession.

Europäische Flagge

What does it mean for Brighton businesses?

According to the Business Register and Employment Survey Data, Brighton has the second highest businesses per head in the UK, at 401.7 per 10,000 people back in 2011. In 2012 the businesses grew by 295 to 13,563 businesses.

According to the Brighton & Hove Council snapshot, Brighton’s businesses in general were smaller than the national average, with 86% of businesses being considered small to micro, employing less than 10 people.

In a BBC article, the people who are pro-exit or (Brexit) claim that by leaving, there would be a jobs boom and they would be freed from EU regulations and red tape. They claim it will help small and medium sized businesses that don’t trade with the EU flourish. However, The Federation of Small Businesses claimed in 2014 that 20% of its member’s trade overseas.

Business for Britain held a poll called, Brighton and the European Union, What SME’s (small and medium enterprises) Think in August 2015. It claimed that larger businesses are more pro-EU as they are far more likely to trade with the EU and have the means to lobby EU legislation. By contrast, small/medium enterprises are less likely to trade with the EU, but have to abide by EU legislation.

Interestingly, the majority of SME’s when polled in Business for Britain, said there would be no difference in employment if the UK stayed or left. Only the businesses employing 1-9 people said they would be more likely to employ more staff.

The ‘Foreword’ of the poll seems contradicting to this result, ‘The picture that this poll produces are one of an SME community that is very sceptical of the EU. SME leaders firmly believe that the EU hinders rather than helps their businesses. They reject the rationale for the single market, they want to see the burden of regulation reduced and also want to see fundamental changes made to Britain’s membership. They also want to see the British Government back in charge of key policy areas, including employment law, working qualifications and health and safety regulation.’

Despite this, when asked if SME’s would be able to invest more into the company to help it grow, all but the 50-250 category said that cutting regulation would help them in this.

Only the companies employing 1-9 people would be more likely to keep people on during harder times facing fewer EU regulations. Therefore, it seems apparent that fewer regulations would benefit companies employing 1-9 people the most.

It is important to note that very few SME’s actually trade with the EU and that in most cases exports/imports will not greatly affect these businesses. In fact, Business for Britain held a poll in 2013, stating that only 5% of SME’s were found to export to the EU.

A large revenue stream in Brighton is tourism and according to The Economic Impact of Tourism – Brighton & Hove report back in 2012, Brighton had 1,471,000 staying trips, around 1,126,000 were domestic visitors (79%), whilst 345,000 were foreigners (21%). Staying visitors brought in roughly £500 million in 2012 alone. According to the report, around 18,000 jobs are linked to tourism in Brighton.

By leaving Europe, many think that Britain will be a lone island without much influence and without many friends, possibly isolating the UK from EU citizens. The CEO of Monarch Group, Andrew Swaffield, states that it is very likely that there will be an increase in flight prices in and out of the UK to Europe following an exit.

‘If the UK were to exit the EU, Monarch would view the outcomes for the travel sector as very negative, not least because of the uncertainty that would follow in the aftermath,’ he said.

‘This sweating period after the exit would be very damaging for the sector. An exit would most likely lead to higher airfares and fewer scheduled flights between the EU and the UK.’

What that could mean is that more EU nationals may want to take holidays in other EU countries that are more affordable, resulting in a drop in the council’s revenue. Despite this, the majority of overnight stays in 2012 were visitors within the UK, therefore the effects would likely not be devastating.

Come June 23rd, the UK has a huge decision to make, and much of the consequences cannot be known for sure. There are positives and negatives to each decision and they must be weighed accordingly.

It is more than possible that Brighton could take a small bump in tourism revenue, and it is also possible that small businesses get their wishes by having more control of employment legislation.

What UK Thinks have combined an average of six polls by April 19th and has 52% wanting to remain, whilst 48% want to leave.

We want to hear from you. What are your thoughts and concerns?

Rhys Wilson-Plant

Image: Nightowl via the Creative Commons Licence

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