CBI report fires off a new volley in the EU 'IN/OUT' debate

‘Brexit’ – the potential for the UK electorate to vote to leave the European Union would, according to a Confederation of British Industry (CBI) report, constitute a “serious shock” for the British economy. Their research warns of a cost of up to £100 billion to the economy and close to one million jobs by 2020. CBI director-general, Carolyn Fairbairn, warned of “a real blow for living standards, jobs and growth”.

The research looked at two outcomes following a Brexit decision – a free-trade agreement being swiftly agreed upon with the EU within five years or, if the UK decides to conduct business via membership of the World Trade Organisation, a more drawn-out period of negotiations. In either scenario, according to the report, short-term uncertainty would cause widespread insecurity among the business community; firms would delay implementing strategic investment decisions while the UK renegotiated the 50 deals around the world currently run through the EU.

However, Brexit supporter Peter Hargreaves, founder of funds supermarket Hargreaves Lansdown has spoken of an “absolute fillip” for the UK following an ‘out’ vote while fund manager savant Neil Woodford has commissioned a report by Capital Economics, which concluded that an EU exit would not have serious consequences in the longer-term, predicting a “nil sum game”. Neil Woodford himself believes that “the fundamentals of the economy will be relatively unmoved” and the vote would have a marginal effect on his investment strategy, given that the major companies in which he invests often have “absolutely nothing to do with the UK economy”.

Short-term uncertainty following ‘Brexit’ appears highly likely; but the Capital Economics report identified a greater threat, the lost productivity never regained since the financial crisis. “Regaining that lost ground” they argue “would offset even the most negative effects of Brexit on the economy”.

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