Posted by emmaandrews - February 23, 2016 9:02 am
EU Referendum
What would leaving Europe mean for UK Business and, more specifically, Farming?
David Cameron won the 2015 general election on a pledge to hold an in-out vote on the UK’s membership of the European Union (EU). The date of this vote has now been announced as 23rd June 2016.
With the headlines largely discussing immigration, we have summarised below the arguments for staying or leaving the EU with business and more specifically, Farming, in mind.
Arguments in favour of staying:
If Britain votes to leave the EU, it will have to negotiate a new trading relationship with what would now be a 27 member organisation, to allow British firms to sell goods and services to EU countries without being hit by excessive tariffs and other restrictions.
The EU is the UK’s main trading partner, worth more than £400bn a year, or approximately 52% of the total trade in goods and services. Complete withdrawal from the EU would see trade barriers erected, with car exports to the EU, for example, facing a 15% tariff and imports a tariff of 10%.
If Britain went for a completely clean break with the EU, its exports would be subject to these tariffs yet they would still have to meet EU production standards, harming the competitiveness of British business. The end result could be a trade war between Britain and the EU, which could cripple Britain’s export industries.
Arguments in favour of leaving
Britain could negotiate an “amicable divorce”, but retain strong trading links with EU nations.
The EU is not as important to British trade as it used to be, and continuing turmoil in the Eurozone will make it even less so. Even if Britain did not manage to negotiate a free trade deal with the EU it would not be disastrous.
The UK would be free to establish bilateral trade agreements with fast-growing export markets such as China, Singapore, Brazil, Russia and India, through the World Trade Organisation.
Farming:
Arguably more than any other business sector, British farming is heavily influenced by Britain’s membership of the EU through the Common Agricultural Policy (CAP).
Arguments in favour of staying:
A major reservation for British citizens when considering the idea of leaving the European Union is the farm subsidy. The subsidy is a set amount of money per land used to incentivize farming. This will cease when Britain leaves the EU and make the British economy suffer.
A recent report by Agra Europe suggests that only the most efficient 10% of farmers will be able to survive without the multi-billion pound subsidies currently handed out by Brussels.
Leaving the EU could damage UK food exports and cause large multinational food companies to relocate away from the UK.
It would choke off the supply of much-needed seasonal labour from Eastern Europe.
Arguments in favour of leaving:
Levels of government support to British farming would be unaffected, and might actually rise as the UK contributes more to the CAP than it receives back.
Government support would be targeted at issues affecting British, not European, farmers.
Farming support would not be diluted by the addition to the EU of large numbers of new farmers in Eastern Europe entering the CAP.
The NFU and other groups would be lobbying British ministers attuned to British interests.
