First published in the Sunday Times on 6th March 2016.
HOW should entrepreneurs vote in the referendum on June 23? For many, the decision will be about economics. But I think the issue is as much about independence, freedom and self-determination: can we better control our own destiny inside the European Union or outside it? For those who choose to be their own boss, I think the conclusion is clear.
At heart, the EU is not a free-enterprise organisation. It was meant to promote trade but instead it has become a political mission, bent on promoting “ever closer union”. It is a top-down, centralising bureaucracy. The EU is a corporatist, statist institution, essentially run by the unelected functionaries in the European Commission and an unaccountable European court in Luxembourg. As Michael Gove wrote recently: “As a minister I’ve seen hundreds of new EU rules cross my desk, none of which were requested by the UK parliament, none of which I or any other British politician could alter in any way and none of which made us freer, richer or fairer.”
Much of the British Establishment supports the idea of the EU. I recently attended a reception at 10 Downing Street. As I was leaving, I was taken aside by a special adviser to the PM, who asked me, knowing I am a sceptic over the EU, what would make me change my mind. His question had a slight tone of desperation. It was an extraordinary reminder of just how keen the elite are to preserve the status quo. They do not really care about democracy: most don’t like the idea of a vote on the EU, because citizens are not well enough “informed”.
By contrast, I think this debate is tremendously healthy: it allows each side to put its case and the nation to make up its mind. Big businesses tolerate the EU because they are better equipped to deal with the vast quantity of red tape. They have 25,000 lobbyists in Brussels, none of them working for start-ups; they are there to protect vested interests and erect barriers to new competitors.
Many large corporates are campaigning to stay in the EU, scaring the voters with doubtful statistics about the number of jobs that depend on our membership. But 85% of the new jobs created in the UK between 2008 and 2013 were in firms with fewer than 50 staff — suggesting new openings are dramatically more likely in smaller organisations than large ones. Only 10% of SMEs trade with the EU but all have to suffer the regulatory burden. Britain should promote innovation from new and inventive businesses. Instead the EU continues to spend more than 40% of its entire budget on the Common Agricultural Policy, a protectionist racket that subsidises a sector representing less than 1.5% of the EU’s gross domestic product.
If we reaffirm our commitment to the EU, we tie our future irrevocably to Europe. But growth in Europe is lower than any other continent and its costs higher. EU nations spend beyond their means. As Angela Merkel said, Europe has 7% of the world’s population and 25% of its GDP, but 50% of its welfare spending. In a competitive world, this is unsustainable.
Britain’s demographics are the best of any of the 28 EU states, save Ireland. As they say, over time demographics is destiny. Meanwhile, a pension time bomb is ticking in major member states such as Germany, France and Italy, which have much higher unfunded obligations than Britain. And average unemployment across the EU is almost twice that of Britain. We need to engage better with more dynamic regions: the EU now represents just 17% of world output, according to the IMF, as countries such as the America, China and India expand.
The EU has made perhaps its greatest interventions in two areas in recent decades: the euro and migration. Arguably both have been a disaster. For Spain, Greece, Italy and Portugal, the inability to devalue and control interest rates has proved devastating to their competitiveness. Many of those now arguing we must stay in the EU were those who proclaimed it was imperative to join the eurozone. If we had, we might well have suffered a recession as devastating as Ireland’s.
The contentious issue of immigration is likely to dominate voting. Of course, skilled immigrants can add value. Arguably some businesses have benefited from low-cost labour coming to Britain to work — mostly from poorer EU countries. But permitting uncontrolled entry of unskilled immigrants from the EU, while heavily restricting immigration of skilled labour from elsewhere, makes bad policy. Many Britons feel we have almost no control over our borders, and that they were not consulted over an unplanned influx of migrant workers. Across Europe, support for the EU is collapsing because of the defects of the Schengen agreement.
David Cameron’s desperate attempts at negotiating changes to the EU demonstrated its profound flaws. As the pro-EU business secretary Sajid Javid said last month, it is “a failing project, an overblown bureaucracy in need of wide-ranging and urgent reform”. Which is why I will vote to leave.