Published on 23 Jan 2013

Cameron’s EU uncertainty ‘not positive’ says UK business

The reverberations from David Cameron’s speech are being felt here at the World Economic Forum in Davos.

The offer of a full in-out referendum was more than many businessman I’ve spoken to were expecting. The prime minister is in for a sharp reception from business leaders he is meeting here tomorrow.

Here’s why. WPP’s boss, Martin Sorrell, a fan of the PM, explained to me this morning how there had been a sense of optimism engendered by the recent raise in global stock markets. Finally, the $2tr sitting on global corporate balance sheets were being primed for deployment and investment, fostering growth and creating jobs.

Sorrell told me that he thought the PM’s speech this morning was like a “Grey Swan” (as in Nassim Taleb’s Black Swan – a bad shock to the system) alongside a Middle East crisis and the eurozone.

Sir Martin told me he “totally understands the PM’s predicament from a political point of view” and that he’s in a very difficult position with Ukip and the right wing of his party, and even that “you can understand that the PM wants a good open debate… if he can negotiate better terms all credit to him”.

But those were the caveats: “The problem is it does creates uncertainty”.

“At the very best you have to say its neutral at worst it’s negative… the outcome from the referendum decision and the speech this morning cannot in my view be positive for investment,” he said.

The speech had “injected uncertainty, and uncertainty is the last thing we need”. Mr Sorrell told me he had been speaking to global auto manufacturers at the Detroit Motor Show from South Korea, India, China, Japan and America who were anxious and “worried” about Britain’s EU membership question marks, and need certainty about long term investment decisions.

“They have raised concerns about investment prospects in Britain with this uncertainty”, Mr Sorrell told me.

Follow @faisalislam on Twitter.

10 reader comments

  1. Philip says:

    The most important thing forCameron is to be re-elected in 2015. Compared to that the country can go hang!

    1. Andrew Dundas says:

      I presume you meant that, for Lord Snooty (i.e. the boy Cameron), his OWN & overriding personal priority is to get to retain the only job (i.e. politics) he’s ever had when he goes to the Polls?

      I agree with that. Yours is a nice point that summarises his speeches v well.

  2. john burns says:

    Mr Sorrell appears to speak on behalf of some businesses, yet one of the main thrusts of Cameron’s speech appeared to be UK wants out of some of EU employment and environment legislation as demanded by UK businesses which support the Tories. Presumable Mr Sorrell’s clients prefer to have to work with EU legislation that other businesses consider is a financial burden? Do those businesses also take their taxable profits elsewhere to avoid UK taxes?
    Is it really helpful to quote a PR man without making clear who his clients are?

    The most significant sentence in the article is that a majority of UK voters want out of EU.
    Could someone explain to me what the modern definition of democracy is?

    ends

    1. Philip says:

      1. By and large the UK already has lower levels of social & environmental protection than much of the EU. What we could do if we left is actually quite limited unless you believe that we should scrap environmental & employment laws & return to London smogs & people being sacked without reason or compensation.
      2. If leaving the EU gave the UK a competitive advantage against the EU, the Pound will appreciate against the Euro negating it.

  3. Steve Willis says:

    End the uncertainty! Let’s have an in or out referendum this year.

  4. Philip Edwards says:

    Faisal,

    I said on one of your long-ago blogs that Britain has no intention of leaving the European Union.

    Nothing has happened for me to change my mind.

    There will be a few fireworks, smoke and mirrors. And we will stay in. Europe-wide capitalism cannot function efficiently without it. Do you really think the REAL power mongers will allow that to happen?

    CamClegg knows this perfectly well. The Two Headed Boy may be dumb, but it’s not THAT dumb. The tory and UKIP loonies are merely being led to the battle blindfold, and they ARE that dumb.

    Britain will stay in. If the Union dissembles, Scotland and Wales will opt in. Thus leaving the Lahndan Little Englanders to eat grass.

    1. Caliban says:

      Well – England without Wales and Scotland. What a terrifying prospect!
      What on earth would we do with all the money we use to support those economies? We might even have to give some of it back to English taxpayers.
      And – heaven forfend – England would never have a Labour government again.
      Oh, my breaking heart!

  5. Tanangui Close says:

    I am surprise that the UK which has brought great things to the EU suddenly lacks the confidence to organise and lead the changes it wants. It is true that as with any organisation or institution, the EU needs some changes and reforms so why can’t British after recognising that there is this need, lead and call for the reforms and ways of fixing it.

    By just emerging and declaring an in or out at a time of economic stress, resembles the factors that led to the rise of tyrants such as Hitler in Germany.

    Why are Germany, France, and say Spain more powerful in the EU than Britain?
    Again, I don’t know how the EU has weakened Britians economic competitiveness while Germany, Finland, Sweden, Denmark, and Holland remain leader in global economic competitiveness.
    The fear of immigrants from Romania and Bulgaria has freaked out everybody. Is it not possible to control the immigrants by setting a quota as countries did in 2004?
    The Swedish foreign minister Carl Bildt yesterday said “Soon Europe will be only seven percent of the world’s population. We can only advance our values and the defence of our interests if we work together.” Will Britons be part of that “work…

  6. Andrew Dundas says:

    Your observations Faisal, include the de-stabilising effect Lord Snooty’s remarks have. Just as his election campaigns in 2010 and since were intended to mislead and to create economic uncertainty.

    Partly these remarks reflect his lack of understanding of commerce – he has no experience in that field – and his anxiety to retain his PM position. He doesn’t want to become another John Major!!

    But he will become just another John Major. He will! He will!

  7. Caliban says:

    This comment section is hugely unrepresentative of the public at large who clearly want a say on our future in the EU.
    For years those who claimed Brussels was moving towards a United States of Europe where derided as paranoid conspiracy theorists. We can now see they were precisely right.
    I do not want to be ruled from Brussels, and I do not want the UK to be absorbed into a USE by stealth.
    I believe I am one of a fairly large majority in this country. But I also believe in democracy, and if the majority do want that, I will accept it.
    Unlike the EU who, if they get an answer that does not please them, change the name of the proposition and pass it without asking the people (I refer to the EU Constitution/Lisbon Treaty scandal).
    UK businesses are so terrified at the prospect of a referendum, and the possibility of us leaving the EU that the FTSE index is at a three year high. Odd that.

Comments are closed.