27 April 2004

HISTORIC SHIFT IN BUSINESS OPINION: LARGE MAJORITIES REJECT EURO AND CONSTITUTION, SAY "MORE LIKELY TO INVEST IN BRITAIN" IF WE TAKE BACK POWERS FROM EU OVER TRADE, EMPLOYMENT, CIVIL RIGHTS

The New Frontiers Foundation has conducted the first major poll of business opinion since 2002. It was conducted by ICM between the end of March and 23 April of 1,000 CEOs.

There has been an historic shift in business opinion on the EU with great political consequences for a forthcoming referendum on the Constitution. Business no longer regards the EU as a modern success story that should have more powers. Instead, the EU is seen as a “failure” and business wants Britain to take back powers over trade, employment, and civil rights. The most significant shifts are, perhaps, among the bigger businesses and CBI members. Also, the figures show that businesspeople susceptible to pro-euro arguments largely reject the other aspects of EU integration that the EU is supposed to catalyse. There are many other interesting answers, including on terrorism and the regional assembly referendums scheduled for autumn 2004.

There is a dangerous disjunction between the assumptions of many MPs and diplomats on the one hand, and those who actually run businesses on the other. Many of the former assume that the EU model is both effective and popular with business. Both assumptions should be abandoned along with other 1970s conventional wisdom. In the world outside Westminster, businesspeople are dealing with the reality of the EU - not the myth peddled by Blair, Heseltine, Patten et al.

The main findings were (numbers in square brackets [] refer to the question number in the survey):

[13] By 73 - 20, businesses believe that, "the EU is failing. Britain will be more prosperous and secure if we keep the pound and take back powers from the EU"; companies with 250+ employees agree 52 - 40, and CBI members by 55 - 36.

[4] When asked whether "the EU" or "the British Government" should handle trade negotiations, they support "the British Government" by 82 - 14; the 250+ agree 71 - 28; those who trade with Europe "a lot" agree 69 - 30; CBI members agree 69 - 31; even those who support the euro agree 65 - 33.

[5] When asked whether "the civil rights of British citizens should be protected by British courts or by European courts", the answer was 86 - 13 for British courts; there were very large majorities for all categories, including 73 - 22 for CBI members, and 61 - 34 for those pro-euro.

[17] When asked whether they think that business regulation should be the responsibility of the British Parliament, or whether "we need EU-wide rules to ensure a level playing field", they support "the British Parliament" by 74 - 22; 250+ agree 57 - 40; CBI members agree 60 - 36.

[9] When asked whether they think more powers over employment to the EU would (a) help deregulation or (b) simply increase regulation, the answer was (b) 65- 13; for 250+, it was an astonishing 91 - 3; for those who trade a lot with Europe, it was 84 - 7; for CBI members, it was 89 - 6 percent; even for euro supporters it was 79 - 7.

[10] Large majorities also thought replacing the pound and further integration would mean higher personal taxes (77 - 11); higher business taxes (78 - 13); higher employment costs (76 - 15); more regulation (88 - 10). The pro-euro companies also agreed with each of these.

[11] Business agree by 76 - 18 that "stable British interest rates" are more important than "a fixed exchange rate between the pound and the euro"; the CBI agree 76 - 21. Astonishingly, even the euro supporters agree with this by 56 - 38. Combined with their answers to Q10, this raises the question of whether their support for the euro is motivated by politics rather than business (previous polls have shown overwhelming support for the proposition that the Bank of England is more likely to deliver stable interest rates than the ECB).

[12] When asked whether they think that the new EU Constitution would mean (a) strengthening the EU, making it work better, or (b) giving crucial powers to a failing EU, they supported (b) by 59 - 18; 250+ agree 56 - 27, those who trade a lot with Europe by 51 - 30, and the CBI 64 - 26.

[15] When asked whether they would be more / less likely to invest in Britain if Britain were to "take back powers over trade, employment, and civil rights", 24% said "more likely to invest", and just 3% said "less likely". The figures for 250+ were 22 - 5 "more likely" v "less likely"; those who say they trade "a lot" with Europe answered this 23 - 9; CBI members answered 30 - 7 "more likely"; even those who want the euro voted 11 - 8 "more likely".

When asked to consider the EU in general, business thinks "the EU is bad for my business" rather than "good for my business" by 47 - 27.

[6] Two alternative strategies were suggested: (a) more powers to the EU, protectionism; (b) take powers back from EU, free trade, and educational reform. Business supported “free trade” by 82 - 11; as did 250+ (75 - 17), those that trade a lot with Europe (74 - 18); CBI members (79 - 15); and even euro supporters (64 - 28). This shows the potency of a Conservative message that connected: future challenges, rise of new powers, the answer is liberalization and educational reform - not more powers to an old-fashioned failing EU.

[7] Out of six priorities that could improve living standards, the euro and the Single Market were the lowest: reducing taxes and regulation were easily the highest, with 68% and 63% respectively, versus 11% and 12% for the euro and Single Market. They were also the lowest priorities for 250+ and the CBI.

[8] Large majorities think that the regulations imposed by the Government and EU over the last five years have damaged their business, employees, and consumers.

[14] Businesses think that business organisations should be arguing for power over trade, employment, and civil rights to be brought back to the British Parliament by 80 - 17; 250+ agree 64 - 31. CBI members agree by 71 - 28, IOD by 74 - 24, Chambers of Commerce by 70 - 29, and the FSB by 77 - 20.

[16] By 79 - 17, business thinks that small businesses should be exempt from most EU regulations. 55% think that small businesses would go bust if they tried to implement all the new regulations.

[19] Business thinks that the new regional assemblies would mean higher taxes (72%), higher regulation (71%), and "more control for politicians" rather than "more control for local people" (62%). Large majorities of all business organisations agree.

[20] They supported (b) below by 54 - 41:

(a) Health and education shouldn’t be privatised. If people had to pay businesses for health and education, then the rich would get better services than the poor. The fairest way to provide education and health services is for the state to provide them free at the point of delivery out of taxes.

b. Schools and hospitals are too important to be run by politicians who run things badly. Health and education need more money and independence from politicians. Professionals should be accountable to parents and patients - not politicians. Large tax cuts would mean more growth and more money for schools and hospitals.

[21] They support (b) below by 55 - 32:

(a) War is only morally justified if it is voted for by the UN Security Council. Therefore Britain should never take military action unless it is unanimously agreed by Russia, China, France, and America.

(b) A decision to go to war does not become ethical because it is voted for by other countries on the Security Council like China and Russia. Britain should seek alliances but not give another country a veto on British military action.

[22] Business rejects Blair’s argument that "the threat of international terrorism makes it more important that we join the euro and the new Constitution", and instead thinks, "the threat of international terrorism makes it more important that we keep the pound and keep control of our own affairs” by 65 - 19.

Right at the start of the survey, before they have thought about any of the issues, they replied 70 - 22 to the question of how they would vote tomorrow in a referendum on the euro. The 250+ businesses support the pound by 55 - 41, compared with 52 - 41 support for the euro in September 2002 (a 25 point swing). In 2002, just 10% of 250+ wanted the CBI to campaign for the pound. In 2004, 66% of 250+ think business organisations like the CBI should argue for powers to be taken away from the EU. The MORI business leaders survey in 2002 found 56 - 32 support for the euro.

Michael Spencer, CEO of ICAP Plc, said:

"Blair’s presumption that the EU is an economic success story cannot be sustained. In fact, the majority of businesspeople think the EU is an outdated structure that is bringing economic and democratic failure. Business wants Europe to be liberalised and democratised - it does not want this damaging Constitution."

Dominic Cummings, Director, said:

"There has been a historic shift of opinion among businesses of all sizes. They not only strongly oppose replacing the pound and the new Constitution - they also regard the EU as a failure and want Britain to take back powers over trade, employment, and civil rights. Britain should be setting out an agenda for real reform of the EU so it can face the challenges of the 21st Century - not adopting a Constitution that looks like it was written in the 1970s."

For the full tables click here