UK business leaders urge caution after Cameron's EU referendum pledge

British businesses gave qualified backing to the Prime Minister's pledge for an in/out referendum, but raised fears the vote will create greater uncertainty for under-pressure UK companies.

The British Chambers of Commerce (BCC) called on the British government to bring forward the timetable to ease uncertainty, while manufacturers also warned that David Cameron's tough-talking strategy could weaken the UK's ability to influence reforms in the EU.

John Longworth, director general at the BCC, said: "Announcing plans for a referendum on British membership puts the onus on the rest of Europe to take the Prime Minister seriously, as they will now see that he is prepared to walk away from the table."

But he added: "The lengthy timescale for negotiation and referendum must be shortened, with the aim of securing a cross-party consensus and the outline of a deal during this Parliament."

The Institute of Directors (IoD) also welcomed the referendum on the UK's membership of the EU, saying it was better to put it to vote than "shy away" from the issue.

Simon Walker, director general of the IoD, said the move will help put to rest doubts among its members who have become "sceptical about many of the institutions and practices of the EU".

"A future referendum to decide the workings of our relationship is the best way to affirm Britain's participation in a free-market Europe which is competitive and deregulated," he added.

However, Mr Cameron's plans are "not without risk", according to the EEF manufacturers' organisation.

Europe is the UK's biggest trading partner and there are worries among manufacturers in particular that an exit from the EU would further weaken Britain's export industry.

The latest figures show that UK exports to the EU stood at £13.1bn (€15.5bn) in November, against £12bn (€14.3bn) for the rest of the world.

Exports to the EU have already been hit badly by the eurozone debt crisis and were down another 5.8% between October and November and 2.7% lower year-on-year.

This has further increased the global trade gap, with exports of £24.8bn (€29.5bn) far outstripped by imports of £34bn (€40.4bn) in November.

Terry Scuoler, chief executive of the EEF, said: "If the door to a UK exit from the union is open it will diminish our ability to influence the reforms that Europe needs."

He also said there needed to be a "dramatic improvement in the quality of rhetoric and debate" for the British public to make a properly informed decision.

Neil Prothero, lead UK analyst at The Economist Intelligence Unit, said the uncertainty over the UK's future in the EU could damage the UK's attractiveness to businesses, given the UK's already shaky economic outlook.

"Will firms - domestic and foreign - be prepared to commit to invest in the UK in such an environment?," he said.

  • Click to stay connected with more stories like this
  • Sign up here to receive news by email. Once per day, no spam.

Most Read in Business

  • Moyes 'given less time due to debt'

    Manchester United's mountainous debt pile and wage bill meant its owners could ill afford to give David Moyes the same amount of time to succeed as his predecessor Alex Ferguson, it was claimed today.

  • Netflix announces summer price rise as profits surge

    Netflix is preparing a sequel unlikely to be a hit with subscribers – the internet video service is about to raise its prices for the first time in three years to help pay for more programming such as its popular political drama House Of Cards.

  • GSK and Novartis agree tie-up deal

    GlaxoSmithKline and Swiss rival Novartis are to create a consumer healthcare powerhouse as part of a string of deals in the pharmaceuticals sector today.

  • Pic: Danielle Walquist Lynch / CC

    Penneys heads stateside

    Primark is opening stores in the north east of the USA.

  • Ryanair increases baggage allowance on flights

    Ryanair is to allow passengers bring a second small carry-on bag on board, in addition to a free 10kg cabin bag allowance from Sunday.

World Market

Currency Rates