Fallout forecasts polarise opinion

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EU Referendum – May 2016

But professor Chris Rowley of Cass Business School, points out that on both sides of the argument there are “extreme positions on economic, employment and trade impacts – from costing three million jobs and being shut out from EU markets, to freedom from rules and regulations”.

He says: “We’ve witnessed the well-planned onslaught of one-sided ‘Project Fear’ forecasts from the Remain side. They have raised issues of short-term shock and long-term problems – and are increasingly apocalyptic.

“The Leave campaign has hit back with economic analysis that the UK can exit without materially damaging the economy. This notes there are long-term alternatives – from trade deals to free trade – [and] economic gains from leaving, as well as the economic costs and risks of staying in the EU.

“Others have even raised the fact that, whereas 10 years ago, 50 per cent of UK trade was with EU, it is now down to 40 per cent and, as the rest of the world grows faster than the EU over the next 15 years, by 2030 [that figure will be] down to 30 per cent. Of course, firms are currently set up to take advantage of EU membership, so leaving will involve some disruption and shifting of investment.”

Keith Pilbeam, professor of international economics and finance at City University, adds that much of UK company investment is “heavily linked to having a guaranteed EU market of 27 other countries” that we can export to with certainty on a permanent basis – providing the UK remains part of the EU.

“The reason we attract so much foreign direct investment (FDI) is we have a fairly competitive economy and because we have guaranteed tariff-free access to the other 27 EU member states. If we vote to leave, then much of the FDI, associated investment and jobs will disappear and go to our competitors who do have access.”

Exiting the EU may prove slightly better than the “very, very bad” situation some institutions have predicted; equally, staying in the EU could be less positive than some have suggested. Either way, the UK will need to find a new way to interact with Europe and investors will have to deal with the economic implications.

Nyree Stewart is features editor at Investment Adviser