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The European Union is too important to leave it on a whim, says Vince Cable

July 3, 2013 11:41 AM
By Vince Cable Business Secretary in The Times
Originally published by East Midlands Liberal Democrats

EU TRADEThe Coalition Government has created a good offer for investors in the UK. Business taxes are now highly competitive. There is a free trading culture and foreign investors are made welcome.

Labour markets are flexible. The Government has maintained investment in world-class universities, science and apprenticeships even in a difficult time for public spending. And there is, within the industrial strategy, a framework for long-term partnership between business and government.

But we need to counter doubts as to whether Britain really is open for business. There are repeated complaints from the business world that visa administration is discouraging visitors from the emerging market economies and obstructing businesses in the UK who need senior and specialist staff from overseas.

When big-spending Chinese visitors go to Germany rather than come here to the UK and talented Brazilian students switch from the UK to the USA then there is a challenge we have to address.

That problem can be fixed with firm political leadership. What can less easily be fixed is the growing, gnawing doubt among Asian and American investors about Britain's future role in the European Union.

Many of them - from banks to car companies - are based in the UK because they see us as a gateway to the EU Single Market, the biggest concentration of purchasing power in the world, by far.

Seen from the outside, Britain has an ideal position in relation to the EU. It is as a fully integrated member, able to determine how the Single Market should be adapted to incorporate digital trade, for example.

At the same time Britain takes the lead role in pressing for an outward looking trade policy, as with the launch of the EU-US Transatlantic Trade and Investment Partnership negotiations. We are winning the argument in Europe for a deregulatory business culture. However, the UK is not directly involved in the Eurozone convulsions and has the advantage of a flexible exchange rate in helping the country adjust to the painful consequences of the banking crisis and recession.

The companies I meet, who all regard the UK as an excellent place to do business, are mystified as to why all of this should be thrown into doubt by those seeking an exit from the EU, and they worry about the uncertainty now being generated in the years running up to any referendum.

Those who seek exit appear to believe in a comfort zone of semi-detached membership of the Single Market as enjoyed by Norway or Switzerland. But these countries have no say in formulating the rules and regulations to which they must submit. If we went that way, the rules would stay, the influence would diminish, and the investors leave.

Others argue that Britain has a viable future outside the European economic orbit altogether, implying that this makes it easier to trade with Asia and other rapidly growing parts of the world. But Germany, in particular, is proving rather better at doing just that while firmly anchored in Europe; indeed at the heart of it.

Nor is there any sign that important trading and investment partners would be interested in cutting special deals with the UK rather than a much bigger European Union. Again, this position is deluded.

The debate around a British exit is a massive diversion of political energy when the country needs single-minded concentration on repairing the economic damage after the financial crash and on maintaining competitiveness. It is to be hoped that serious members of the political class will provide the confidence and continuity that inward investors need.

Vince CableDon't miss your chance to question Vince Cable in Chesterfield