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Brexit could cost UK £100bn and one million jobs, CBI warns

Confederation of British Industry has warned a UK exit from Europe could cause major disruption to the British economy.

 
Brexit could cost UK £100bn and one million jobs, CBI warns

The Confederation of British Industry (CBI) has warned a UK exit from Europe could cause major disruption to the UK economy.

According to research commissioned by the business group, a so-called ‘Brexit’ may cost the UK £100 billion and result in the loss of 950,000 jobs by 2020.

The study said the ‘serious shock’ of this is unlikely to be countered by the renegotiation of UK trade deals with its former European partners.

‘This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth," CBI director-general Carolyn Fairbairn said in a statement.

‘The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. Even in the best case this would cause a serious shock to the UK economy.’

The report clashes with the views of Brexit supporters, who include Peter Hargreaves. Last Friday the founder of funds supermarket Hargreaves Lansdown claimed an ‘out’ vote would be an 'absolute fillip'  for the UK.

'I’m firmly convinced, that day – hopefully – we decide to leave, that little bit of insecurity, that little bit of unknown will be an absolute fillip to everyone,’ Hargreaves said on BBC Radio 4's Today programme.

A report by Capital Economics commissioned by Neil Woodford concluded a British exit from the European Union would have no long-term consequences and was a 'nil sum game' in the words of the fund manager.

However, investment group BlackRock, and others, have stressed the risk and uncertainty that Brexit would cause for the UK economy. 

The CBI commissioned PwC to look at two scenarios in the event of a Brexit. The first examined the outcomes of a swift free-trade agreement with Europe, while the second looked at what would happen if negotiations were prolonged.

In both cases it was concluded there would be lots of uncertainty in the short-term, resulting in firms postponing hiring a strategic investment decisions.

18 comments so far. Why not have your say?

jeffian

Mar 21, 2016 at 10:28

What bosh! The CBI should concentrate on doing whatever it thinks it does and leave the politics alone. The 'economic' argument is pure speculation (and one has to remember their views on ERM and joining the Euro) and is irrelevant unless you think that it is worth giving up our Parliamentary sovereignty for a couple of points on GDP over the next 5 years. Or not, as the case may be.

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Mickey

Mar 21, 2016 at 10:44

No surprise here then, just another pro-eu story stating that leaving may, could or possibly could mean this or that, why are the CBI being so cautious or have they been invited to yet another secret lunch with the Government at some foreign embassy?

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Jon

Mar 21, 2016 at 18:01

The CBI has received over £1m in grants from the EU

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S_M

Mar 21, 2016 at 19:41

Out come the cynics seems like its not only the daily mail and mirror readers then.

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Mike R

Mar 21, 2016 at 22:03

This weeks Political show from DC to Go via IDS, gives little confidence that it has the competence to manage in England. Let alone re organise following any Brexit. And the rest of the Union Scotland, Wales and NI not to mention the other EU States must have been aghast watching parts of the cabinet at work or resigning. That unknown is becoming a wider Chasm.

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Uncle Bulgaria

Mar 21, 2016 at 22:06

So the study commissioned by the CBI "concluded there would be lots of uncertainty". Hmmm, not terribly specific is it? We urgently need a sensible debate instead of wild speculation, guesswork and emotion otherwise I don't see how the nation is going to make an informed choice in June - it will be swayed by personality politics.

Some have highlighted the potential reluctance of the EU to enter trade agreements with the UK following an exit vote. But does that really stack up? If we consider automotive as an example, it would seem likely that companies including Mercedes, BMW, VW, Audi, Skoda, Seat, Renault, Peugeot-Citroen, to mention a few, would be keen to continue to export vehicles to the UK. I'm sure there are plenty of other industry examples.

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jeffian

Mar 21, 2016 at 22:51

S_M,

It's not a question of being a "cynic" or a Daily Mail or Mirror reader, it's a question of whether you want to be able to hold to account those who control our laws and many aspects of our lives. Within a Parliament of 27 other nations we hold little sway as a nation and exactly zero as individual voters whilst many of the executive decisions which affect us are actually taken by the Commission which is completely unaccountable to the electorate. Cameron urges us to stay within a "reformed" Europe, but the point is that it isn't reformed in any way and shows no signs of being prepared to change or even recognise that there is a problem. Personally, I feel that the economic argument is irrelevant but I am surprised how many people seem to feel that Europe is the answer to all our economic fortunes when the Euro is on the edge of imploding, in the meantime causing untold damage to the peripheral states, almost all EU countries other than Germany seem to be in permanent stagnation and every company in which I invest which deals in the European market warns year after year that that market is a problem for them. Fear of the unknown? Phooey. Carpe Diem.

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Roo

Mar 21, 2016 at 23:24

Nothing adverse will happen from leaving the EU organisation in terms of trade. In the end, people want to trade with each other and not lose their income. Britain will compete by becoming a low taxation economy and luring corporate investment that way. Also, it will allow more flexibility in negotiating trade agreements with non EU countries. I believe we cannot lose with BREXIT.

If we vote to stay in the EU organisation, we'll be held to ransom on every policy that the non-elected EU organisation comes up with and the EU organisation will screw Britain over at every opportunity thereafter.

Moreover, if the UK leaves the EU organisation, I think every other country will leave the EU starting with the PIGS countries.

This vote is about what the people want, not the corporate interests of a few elite who can easily adjust their businesses accordingly.

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S_M

Mar 22, 2016 at 08:07

Jeffian

It's not just a question of doing trade with other EU states, it's about putting our country in a position where we can trade with India, China and the US. All of these countries pour billions into the UK in the form of inward investment and all of them have said that if we are outside the "club" then it will be to our detriment.

I have first hand experience of dealing with companies who use the UK as their base to do business with the rest of Europe. Do not underestimate the impact on our economy if inward investment declines.

To say the economy isn't the major factor for deciding is ridiculous, unfortunately many of the "out" camp can't comprehend economics - all they can see is their negative view of migration despite the facts proving them wrong.

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Roo

Mar 22, 2016 at 08:41

The thing that swung it for me was the rubbish negotiation that David Cameron pulled with the EU. Successive British PM's have given away too much determination of our future to unelected and unaccountable people. For me the vote is a matter of principle, economic considerations will be re-negotiated afterwards. India, China and the US will do deals with the UK after it leaves regardless of what they're saying now.

He has come out and generally a very large section of educated opinion feels that we get a raw deal in the EU organisation, although I do agree that migration is NOT a factor leading my decision. My opinion is that, generally, migration is very good for the UK labour market. It's more a matter of reform of the UK benefit system and the inaccurate reporting of immigration and benefits in the UK press.

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jeffian

Mar 22, 2016 at 10:11

S_M,

It's a nice debating trick to shoot down something the other person hasn't said! I never mentioned migration and I made it clear that my objection to remaining 'in' was political rather than economic. It isn't "ridiculous...to say the economy isn't the major factor for deciding"; it isn't. The major factor is whether you want to be governed by an undemocratic, wasteful and corrupt institution over which you and I, nor even our national government, have any influence if it is determined to push through things which we don't want and are not in our national interest. That isn't to adopt a 'Little Englander' isolationist approach; it is saying that post-Brexit we should sit down and agree what our relationship with the rest of Europe should be, as the Swiss and Norwegians seem to manage. I am happy to be a 'European' and 'in Europe', I just don't want to be in the European Parliament/Commission apparatus.

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S_M

Mar 22, 2016 at 10:32

Jeffian

If you read what I said, you will have seen the word "many", that does not necessarily or specifically mean you. So in your own words you are doing what you are suggesting that I am !

For the majority of the "out" camp - immigration is the be all and end all of the argument. That is fact.

There are very few that take the issues to a political level. You talk about undemocratic and wasteful, well all you had to look at was Gordon Brown's new labour and you've had exactly the same thing on your doorstep. To suggest bureaucrats in this country are any cleaner than our European counterpart is nonsense, remember the MP's expenses scandal?

There is also no comparison between our economy and that of Sweden and Norway. Norway in particular is heavily reliant on commodities and has been dipping into its sovereign wealth fund as a result of the depressed oil price. Ironically the commodities slump has affected Norway more than the credit crunch did. My point is our trading relationship is nothing like that of the Scandinavian countries, we export services (accountancy, law, financial services) and if we leave the EU our bargaining position on all of these massive contributors to UK GDP is compromised (within and outside of the EU).

For me if we are better off within the EU, no matter what the political consequences then I am happy with that. There hasn't been one study issued so far that suggests otherwise.

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jeffian

Mar 22, 2016 at 11:15

S_M,

Well as your post was specifically addressed to me, it didn't seem unreasonable to assume you were including me within your "many"!

"For the majority of the "out" camp - immigration is the be all and end all of the argument. That is fact." Is it? Can you give me your evidence for that?

As for "Gordon Brown's new labour", well that's just the point; where are they now? The electorate were able to do something about it. Jean Claude Juncker was reputedly at the heart of Luxembourg's corporate tax-avoidance set-up. And where is he now? Quite. And what can you and I do about it? Nothing - he doesn't have to face an electorate.

"For me if we are better off within the EU, no matter what the political consequences then I am happy with that." Well there we have it; the pocket rules the heart and the head and therein lies the unbridgeable gulf between us. Mind you, try replacing the letters 'EU' in that statement with 'USSR' or 'US'. Is there anything you wouldn't do for money?!

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S_M

Mar 22, 2016 at 11:42

Jeffian

Think you got the wrong forum, this is CITYwire a site for dedicated financial professionals, their clients and serious investors. The clue is in the name !

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jeffian

Mar 22, 2016 at 11:56

And goal-post removal men, apparently!

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Jon

Mar 22, 2016 at 13:46

S_M Given our large trade gap in favour of the EU any competent government can negotiate a free trade and services agreement with the EU - anything else would hurt the EU more than us.

Two wrongs do not make a right. We may have some problems with UK Governments, but this is all the more reason to avoid another within the EU. It is corrupt, unaccountable financially and democratically and many of its policies prevent the UK from developing new industries (eg GM) and strangling others through quotas. It's waste is in another league.

From the gross saving in contributions we can afford a grant fund to replace those received from the EU, except that we can have more control to avoid the many white elephants and wastage.

Given that many of the pro-EU lobby have vested interests whilst the Brexit lobby has none, then the deabte is not on a level playing field, but by looking at the real facts rather than the scare mongering about jobs (which will not happen if we have free trade etc. and should increase with new trade deals) the picture is clearly not as painted by the partisan CBI

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S_M

Mar 22, 2016 at 14:55

Jon I could not give a hoot about the EU. It's India, China and the US that will be the drivers for our future growth. But we've got to be in the club to tap those valuable markets.

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jeffian

Mar 22, 2016 at 17:58

If the "club" is the right one to "tap those valuable markets", how is it that with the exception of Germany almost every EU economy has for years either been mired in stagnation or outright recession? If we're looking to the EU as the engine of economic growth for the future, God help us.

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