EU referendum would create damaging uncertainty
Tony Ward is the chief executive of Clayton Euro Risk
I don’t agree with everything our esteemed governor of the Bank of England Mark Carney says, but I found myself nodding vigorously to his comments last week. Not the latest growth figures projected in the bank’s latest Inflation report but to his remarks on the referendum regarding Britain’s membership of the European Union.
Mr Carney suggested that businesses want the referendum to take place sooner than the end of 2017, as promised by Mr Cameron. He advised that a vote should take place as soon as possible, calling on the government to enact the legislation at the ‘appropriate speed’. I agree completely.
There’s nothing that businesses dislike more than uncertainty and I believe this inertia could inflict damage the economy. We saw this prior to the general election, with some businesses delaying making decisions on recruitment and expansion, as reported by the Institute of Chartered Accountants and England and Wales and Grant Thornton. This could easily happen again. Mark Carney has indeed acknowledged that lack of clarity could deter businesses from making important investment decisions.
Company directors have repeatedly cited a referendum and subsequent possible British exit as one of the biggest threats to growth. Ratings agency Standard & Poor’s has claimed a referendum could trigger a downgrade of the UK’s AAA credit rating.
Well, we are committed to the referendum and it’s not going away. I understand that the government may want to renegotiate the UK’s relationship prior to going to the polls but hopefully it will take on board comments by Mr Carney and business leaders, act sooner rather than later.
Uncertainty is an inherent part of business life, with which competent managers must learn to deal; prolonging that uncertainty unnecessarily, however, is counterproductive and encourages both speculation and hesitation, neither of which are helpful to commerce.
Leaving the EU would be bad for Britain; losing the best part of two years to indecision and then leaving would be even worse.