This month, nearly three years after the prime minister first indicated his intention to renegotiate the terms of the UK’s relationship with the EU, we will finally learn what his demands for a revamped settlement will be.
Under pressure from both Brussels and his counterparts in capitals across the EU, David Cameron will have to detail his shopping list for reform, perhaps before he was willing to do so.
From our consultations across the UK, we know that many in British business are also impatient to understand the prime minister’s priorities. With fully half of business people saying that Cameron’s reform agenda could affect their vote in the forthcoming referendum, clarity and transparency are crucial.
Business has been clear for some time that the UK’s relationship with the EU needs to change. Although some in Westminster and big global companies argue that we should leave things as they are, they miss a fundamental point: the status quo is not an option. As the eurozone countries integrate further, the shape of the European Union is changing. And as that happens, our relationship with the EU must change too.
I wrote to the prime minister immediately after the general election setting out five areas where businesses across the UK want to see change. First, guarantees for Britain and other non-eurozone countries. Since the UK is unlikely ever to join the euro, we need to ensure that our trade and financial interests are protected. Without this, there is a danger that we will be marginalised and politically and economically damaged.
Second, we need a cast-iron UK opt-out from the principle of “ever-closer union”. Our surveys show that UK businesses want to see the locus of power shift back from Brussels to Westminster, something that would be difficult unless we can put a brake on further integration.
Third, business demands a single market that actually works. The UK is, by and large, a service sector economy, yet there is simply no meaningful internal market in services within the EU. At the same time, the single market in goods is imperfect and unravelling. There has always been a question over the level of commitment from some member states about achieving a true single market. If the prime minister is serious about ensuring the EU works for British business, then a root-and-branch reform of the internal market is critical.
Fourth, the regulatory burden from Brussels needs to be pared back and what remains must be enforced equally across all countries. Although the European Commission has embraced the idea of focusing on enforcement of the rules, there is no sign that this applies in practice.
If the European regulations aren’t being applied equally, then the prime minister should seek to protect UK businesses from additional burdens – again, through an opt-out if necessary. There needs to be an option for a red card for regulation that does not relate directly to trade, which can prevent businesses from scaling up and breaking into new markets.
Fifth, and finally, there must be some sort of balanced agreement on migration. The ongoing refugee crisis has kept this issue at the front of public consciousness. There must be a plan that is driven by the skills requirements of our economy, so that businesses can access the talent they need while taking into account the need for stability and long-term social cohesion.
The coming year is set to be pivotal for our country and our future prosperity. If the prime minister sets the right objectives for his EU renegotiation, he will help create a better environment for British business success and the EU will benefit too. However, if the key business issues are overlooked, an important opportunity to recast our relationship with the EU may well be wasted for a generation – or even for ever, as the result may be that we are no longer members of the club.
