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Why John Longworth Is Wrong and Why It's Right for Business That We Remain

21/04/2016 08:06

Small businesses will be among the biggest losers if Britain were to vote to leave the European Union (EU) on 23rd June - and they know it.

Contrary to what the Leave campaign wants us to believe, an extensive survey of 10,000 small businesses found that 75% want to remain in the EU, and the figure is even higher - 82% - among small firms that actually do business in Europe, according to a survey by Goldman Sachs and Aston University.

On the principle that "man bites dog" is more of a story than if it's the canine teeth that are doing the damage, so it's the business leader who is out of line who gets the media attention.

So it is with John Longworth, who has become a bit of a "Brexit" martyr after stepping down from his job as Director General of the British Chambers of Commerce.

I have a good deal of respect for the work that Longworth did at the British Chambers of Commerce. He was a trenchant critic of the Government's failure to rebalance the economy towards infrastructure, exports and the region.

But on the European Union, he could not be more wrong. His claim that "brighter economic future for itself" outside the EU is profoundly misguided. Zac Goldsmith, when recently asked at an Asian Business Awards dinner to name one benefit that would come to the hundreds of businesses in the room if Britain were to leave, could not give one example.

I believe Longworth's claim is a betrayal of his former members. He is asking them to jump off a cliff and just to believe - against all the warnings from the IMF, OECD, the London School of Economics, the Treasury and others - that there will be no hard landing. He does not know how long the jump will be, or what the landing will be like.

The CBI puts the overall economic cost of leaving at £100billion with nearly a million lost jobs by 2020. Other analysts say the drop in GDP will cost us more than we might save in contributions to the European Union budget. And the 5-10 years "short term" uncertainty economists talk about could be an underestimate.

Leaving the European Union would guarantee a bleak future for British business in general - and small businesses in particular.

As is well known, he made his remarks at the BCC Annual Conference in a personal capacity - precisely because BCC members reject Brexit by a two to one majority. There are similar figures in surveys of other business organisation members.

Small firms need stability and certainty to continue growing, not the disruption that a vote to leave the EU would bring.

Small businesses are more globally-minded than ever before and Europe is their largest export market by far.

Around 100,000 small businesses export to the EU, but they would not the only losers from if we were to leave the EU. Many small firms are key parts of the supply chains of larger exporting companies.

And small businesses are increasingly global in their outlook. According to the OECD, 40% of UK exports are part of a global supply chain.

The European Single Market is especially important for small businesses that export. It gives them easy access to a market of 500million people.

I was talking to a young tech entrepreneur in the North West this week. He stressed that businesses like his can become global in an instant, and being part of the European Union gave him much greater reach and opportunity to grow.

If you were a new entrepreneur starting out - where would you prefer your enterprise to be based? Somewhere with a single set of rules for 28 nations - or in a country that had to contend with 27 separate bi-lateral agreements?

Small businesses couldn't afford to comply with multiple sets of rules.

The fact is hundreds of thousands of small businesses know that membership of the European Union is in their interests. They believe that Brexit would be bad for them. As the referendum campaign picks up, their voices must be heard too.

Seema Malhotra is Shadow Chief Secretary to the Treasury and the Labour and Co-op MP for Feltham & Heston

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