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The Brexit debate: should we get out or ‘remain, reform and revitalise’

Illustration: James Fryer

Could the UK pulling out of the European Union pose as big a threat to the global economy as a ‘hard landing’ in China? That was the claim made recently by the Organisation for Economic Co-operation and Development’s (OECD) chief economist Catherine Mann. According to Mann, a vote to leave the EU will not only impact the UK, but would also have a significant impact on the global economy.

In a report laced with warnings, the OECD said Brexit would be a major risk for the economy and would ‘heighten uncertainty, raise the cost of finance and hamper investment’.

That was just one report – admittedly from an influential source – on just one day in a three month campaign. Despite such warnings – and there have been plenty, both for and against, from politicians, businessmen and economists – the latest opinion polls suggest the UK public remains undecided. Whilst the polls are certainly close, it should be remembered that almost every poll predicted the result of last year’s General Election incorrectly. We would be advised to take the findings with a large pinch of salt and the margin of error suggests there is no clear idea of the outcome.

An emotional process

So what of the debate? While terms like ‘nasty’, ‘bombastic’ and ‘vitriolic’ are being used to describe it, we need to appreciate this an emotional matter, calling on beliefs and allegiances for many. The heart will be just as important as the head in reaching a decision.

Many would agree the debate is being driven more by emotion than by facts and such ‘facts’ that are produced have not been qualified or verified. For most, especially the undecided, facts will determine how they vote. Visit the Vote Leave campaign website and you’ll find ‘facts’ suggesting the EU is ‘bad at science’, ‘took money from the science budget to prop up the Euro’ and is funding outdated businesses and technologies for political reasons, rather than embracing the latest digital technologies.

But where’s the evidence? Both sides of the debate are equally guilty of using unverifiable ‘facts’ to support their arguments.

In a recent Purchasing Manager’s Index survey, more than a third of respondents said the referendum was having a negative impact on business.

Stephen Cooper, a KPMG Partner and head of industrial manufacturing in the UK for the consultant, suggested that businesses should be working through the impact that Brexit might have. “Amidst all the uncertainty, having a ‘plan to plan’ identifying the boardroom top priority list for the morning of 24 June in the event of an exit vote is well worthwhile,” he suggested.

Whether you are a design engineer, a managing director, an operative in a factory – a journalist for that matter – the problem is that ‘facts’ are hard to keep track of, to understand and to verify. One commentator has described the debate as ‘too much opinionated noise’.

So what of the impact of a Brexit vote on the UK’s electronics industry? It is unlikely to loom large, sadly, in most people’s decision on how they intend to vote, but the EU is certainly an important issue for the industry.

A recent opinion poll conducted by the Institution of Mechanical Engineers (IMechE) found that 56% of its members supported the UK staying in the EU, 27% said they want the UK to leave, while 17% are undecided.

Stephen Tetlow, IMechE chief executive, said: “The majority of mechanical engineers continue to support the UK staying in the EU, but these latest results show the number of engineers who are undecided on how to vote is still relatively high.”

But few companies in the electronics industry are willing to comment; most of those contacted by New Electronics either said they were remainers or were unwilling to make their position clear. It should be noted though, that even when we approached Vote Leave directly they failed to respond to our requests for an interview.

Happy to go on the record was John Macmichael, managing director of Solid States Supplies. “Like it or not, Europe can still boast a strong manufacturing base and this provides a vibrant market into which UK electronic component and equipment suppliers can potentially sell their wares.

“To lose free access to such a large and wide ranging market does not seem sensible. Couple this with the pursuit by successive UK governments of policies in support of a service and financially based economy at the expense of a manufacturing base and the problem of leaving Europe is further exacerbated.”

The Electronic Systems Council (ESCO), which represents UK electrical and electronics companies, has been vocal in its support for continued membership. While it accepts the choice in the EU referendum is one for the British people, it believes that EU membership has benefitted the sector.

“The electrical and electronics sector is a thriving part of the UK economy and we believe that it has benefitted from membership of the EU,” says ESCO chairman, Brian Holliday. “As a sector, we represent 6.8% of the total UK economy and employ more than 1.16million people. We benefit from EU membership in terms of straightforward access to what is our major trading partner, from having a wider base to recruit from and because of its positive impact on innovation through research funding and programmes.”

Tetlow warns that the Government needs to remain focused on the key engineering issues likely to be affected by the decision, whatever the result. “The most pressing problems will remain: improving access to markets and people with the right skills; ensuring open access to foreign investment; growth in research funding; and ensuring the UK is still able to continue to play a leading role in influencing European codes and standards.”

A richer picture

Holliday says the debate needs to be ‘broad and fact based’. “That is why we, as an industry body, have decided to take a strong and vocal position. Facts are being thrown around and we believe that not enough is being said, or discussed, in terms of what the EU does well. We are certainly less well informed of the good things the EU is doing and I think it is up to us to create a richer picture of what we are benefitting from.”

According to Holliday, there are far too many ‘unanswered questions’ as to what could happen should we vote to leave.

“I think the majority view in manufacturing is one that leans towards remain,” he suggests.

Those in favour of staying within the EU argue that Brexit will create further complexity and barriers for companies looking to export and that it would be better to remain within the EU than go through the long process many see as necessary should we decide to leave. Those in favour of leaving disagree, suggesting the UK would be better placed to make its own trade deals and would be able to simplify trade relationships by removing unnecessary complexity and red tape.

“The question becomes would a post-Brexit EU still allow us to trade freely across its borders?,” Macmichael contends. “Brexit campaigners are clear that the UK will negotiate a trade deal that is more favourable than any that has been done before by any other country – despite the counter evidence of all the treaties negotiated so far with the EU.

“One major point seems to have been ignored completely; the EU cannot afford Brexit to be successful without risking its complete breakup, so to assume a favourable trade deal can be established would appear to be naïve at best. The conclusion therefore is simple; whilst the heart might say keep your hands off our laws and out of our business, the head says stay in – keep trading and start fighting to reform the EU into an accountable and useful organisation.”

For Holliday, the main issues revolve around access to the EU and the single market, recruitment, innovation and standards and the issue of standards is interesting.

“Straightforward access to the EU – an established single market – is vital, but European standards – a result of that single market – have supported confidence that products designed and made in Europe meet the technical standards which many UK experts have helped to develop.

“UK products are recognised across Europe and beyond because of our active participation in European standards. UK consumers and companies benefit from consistency, reduced cost and improved product safety.”

Holliday makes the point that the UK presently has considerable influence and voting weight in the European Standards Organisations with representation on almost 300 committee and sub-committees (far too complex according to Brexiteers) and a Brexit vote could affect the UK’s ability to influence regulatory policy at a European level.

“By working with our European partners, 160,000 national standards have been harmonised to fewer than 19,000 European standards.”

According to ESCO, free access to the EU’s engineering pool of qualified electrical and electronic engineers is also crucial.

“We face a deficit of home-grown engineers in the UK and, while government and industry are working together to rectify this through schemes like the Electronic Systems Degree Apprenticeship, there are no short-term fixes,” said Holliday.

Brexiteers would argue that, while they might be instituting a much tougher immigration policy, ‘talented’ or ‘vital’ workers would not be barred from entering the UK.

“With EU membership, companies will be able to identify and recruit the right people for the job from a much wider talent pool without the bureaucracy of work permits. Likewise, British engineers will maintain the opportunity to work anywhere in the EU,” Holliday argues.

Finally, through its impact on collaboration, grants and investment ESCO says EU membership benefits the UK’s electrical and engineering sector.

“Emerging digital technologies mean it is increasingly important that we foster innovation and collaboration beyond our borders. Digital technologies represent an opportunity for SMEs and big business alike and we should be building on the UK’s lead in IT, electronics and research to shape and access the wider opportunity, which the EU represents.

“The UK currently attracts significant innovation and investment funds that could be put at risk were we to leave. Indeed, 47% of the EU’s Foreign Direct Investment finds its way here – the UK is seen as the ideal European base for commercial and research activity.”

The EU is certainly not perfect. Will an exit vote damage collaborative relationships, diminish our influence and lessen the legal protections we enjoy? Brexiters argue that it will not and that we would benefit from taking back control from the EU. Alternatively, those wanting to remain suggest that, by being far more active and engaged, we could ‘reform and revitalise’ the EU.

With less than two weeks to polling day, this debate still has a very long way to go.

Author
Neil Tyler

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