Quote:British exit from EU may scare off foreign investors, admits Vince Cable

Business secretary says foreign manufacturing giants have approached the government with concerns about UK quitting

• Angela Monaghan
  
• The Observer, Saturday 18 January 2014 21.30 GM
  

Business secretary Vince Cable has told worried foreign firms there is a 5% chance of Britain quitting the EU. Photograph: Danny Lawson/PA

Vince Cable has admitted that the government is battling to reassure foreign investors who are increasingly worried about a potential British exit from the European Union.
The business secretary has told worried companies that there is a 5% chance Britain will leave. The chancellor, George Osborne, warned last week that Britain will quit if the EU does not reform.
Asked by the Observer whether foreign companies had raised concerns, Cable said: "The answer is yes. What I say [to businesses] as a government minister is that the risks of us leaving the EU are very, very low … and I just try to reassure foreign investors."
The Conservatives have promised an in-out referendum on EU membership following a renegotiation of powers with Brussels by the end of 2017, if they win a majority at the next general election.
The latest Opinium/Observer poll suggests 52% of the British public aged over 18 would vote to leave the EU tomorrow, while 34% would vote to stay, representing a small increase since last November when 50% said they would vote to leave.
The poll further found that Conservatives would vote to leave by 62% to 30%, while Labour voters would choose to remain but only by a narrower margin of 46% to 40%.
Companies including US car giant Ford and Japanese rival Nissan which both have manufacturing operations in Britain have publicly warned they would reconsider their future in the UK should it choose to leave the EU.
"I was surprised that Japanese companies and government which are normally quite reticent, they don't normally go to the barricades came out so openly and said 'look, we want certainty'," Cable said.
Sources close to the US and Japanese embassies said companies were increasingly questioning UK investment plans.
Meanwhile the CBI warned an exit from the EU would put Britain's global future at risk. Writing in today's Observer, the business group's director general, John Cridland, said continued EU membership was crucial for Britain's global economic future.
"A large majority of CBI businesses of all sizes are clear: the UK is best served inside a reformed EU, rather than outside with no influence.
"The single market is a great British success story and has been an engine for jobs and growth in every corner of the country and across the continent."
Adam Nathan, deputy director of pro-European group British Influence, said the uncertainty created by the prospect of a referendum was enough to work against the UK, with companies able to redirect their investment plans or locate their European operations elsewhere.
"It's out there now and on the table. Business leaders are factoring [a potential exit] into their strategy reviews. If you are a US or Japanese business you're not going to lose any sleep over such a decision.
"There are other countries where you base yourself and operations can be moved quite easily. They may not shout about these decisions, but it can ultimately mean a loss of staff, and a loss of benefits for the UK supply chain."
Japanese company Hitachi Rail is planning to invest £82m and create hundreds of jobs at a new train factory in Newton Aycliffe, Darlington, where it will build hundreds of carriages. A spokeswoman for the company said the investment would go ahead, with construction work already started on the site, but added Hitachi would prefer the UK to stay in the EU.
Neil Rami, chief executive of the inward investment agency Marketing Birmingham, said foreign investors were telling him they were worried about the uncertainty.
"It is making them nervous and reticent. One of the reasons why businesses like Jaguar, Land Rover and Deutsche Bank have chosen to invest and grow in Birmingham is because it offers them quick and direct access to important European markets.
"By pledging a referendum and putting EU membership in the balance, we lose a major string to our bow and potential investors will look elsewhere."