‘We’re not with the veto guy,’ say British firms

A good friend of mine, like many people from Northern Ireland, has both a UK and an Irish passport. In the aftermath of the Iraq invasion, she chose to travel on her Irish passport for a while. Given the bad feeling against Britain in may countries at the time, she felt it was safer.

According to ITV’s Laura Kuenssberg, David Cameron’s veto of the EU fiscal compact is having a similar effect on some British companies.

For the many who have applauded the stance the PM has taken so far, and there are very many, don’t there don’t be mistaken that there are very real risks too. There are fearful rumblings from City sources I’ve been speaking to in the last couple of days. I’m told that big financial firms are starting to pull away from using the UK’s official representatives in Brussels, UKRep, choosing instead to go direct to talk to other countries’ teams, because ‘no one wants to be wrapped in the union flag right now’. There are suggestions that one very significant financial institution is moving away from describing itself as a UK institution, instead choosing to emphasise itself as a ‘global brand’.

It’s the corporate equivalent of talking in a Steve McClaren style mid-European accent and pretending to be from somewhere else. Like my Northern Irish friend, these companies have concluded that being British is more of a liability than an asset at the moment.

With the odd exception, British business did not applaud David Cameron’s veto. As Ms Kuenssberg’s report indicates, a lot of business leaders are quite worried about it. The UK becoming politically isolated from its biggest market is nothing to cheer about.

Though they tend to keep pretty quiet these days, it is still possible to find some people in the City who think Britain should go into the Euro. The world’s main financial centre being inside its largest currency zone would have advantages for some. It is also clear, to those who take a longer term view, that Britain’s position, inside the EU but outside the Eurozone, will become increasingly difficult to maintain as time goes on. EU summits will be preceded by pre-meetings of Eurozone members at which deals will be done and agreements reached before the British delegates arrive.

None of this is to say that Option 2 is untenable but is a position that will require a high level of diplomatic skill to sustain. Britain will need to do its own deals and make its own alliances outside the Eurozone meetings. It can be done; the Eurozone countries are a diverse group with competing interests. But it means that the UK will have to get a lot cleverer. Upsetting even our longstanding allies with the petulant use of the veto is not a good way to start. Even the Poles, says Ms Kuenssberg, are pissed off with us:

Another source told me even Poland, who the UK has often built alliances with is starting to drift away, some saying privately they can’t do business with the UK anymore. And I’ve been struck by the shock that some still feel at the tactic the PM chose. Not least by a source who attended a meeting with a senior minister on the day of the summit itself, who was told that the negotiating position was ‘very soft’. The same source was shocked when next morning it emerged that David Cameron had used the veto – ‘he didn’t protect us while he left the room’, and ‘he stopped the eurozone from sorting itself out’, comparing his stance to Mrs Thatcher’s on Europe, ’she was intelligent enough to stay in the room…he left, and shot himself in the foot’. Ouch! In reality the whole situation is so uncertain that it’s impossible to predict the eventual impact the PM’s position will have but the domestic political success it has brought him is not without its risks.

Indeed, it isn’t. The draft EU agreement shows that the countries of the Eurozone are prepared to go ahead with their treaty without the UK’s blessing and that they intend ultimately to use the legal structures of the EU to enforce it. I don’t agree entirely with Laura Kuennsberg’s reading of it. She claims that the treaty will eventually bind all EU members but, given that the document refers to ‘the contacting parties’ (i.e. The Eurozone countries) throughout, I can’t see how she came to that conclusion. I also, therefore, think Rafael Behr is overstating the case when he says that the agreement will compel the UK to leave the EU within five years. However, his point about the loss of British influence within the EU is well made. To avoid it will require a level of political and diplomatic savvy that the Prime Minister has shown himself woefully short of.

So it’s hardly surprising that some corporations are playing down their Britishness. Companies don’t really do patriotism. If they think their interests are threatened, those that can will abandon their home country if the risks become too great. Ultimately, if they decide that being based in an increasingly peripheral part of the EU becomes a hinderance, they will move elsewhere.

Whatever interests David Cameron thought he was protecting with his unprecedented use of the veto, it wasn’t those of British business. There is widespread dismay at his ham-fisted diplomacy and fear about the impact his actions may have on the UK’s position. It will take time and a lot of hard work to restore Britain’s reputation in the EU. In the meantime, is it any wonder that some British companies are hedging their bets.

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4 Responses to ‘We’re not with the veto guy,’ say British firms

  1. Pingback: ‘We’re not with the veto guy,’ say British firms - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. Jim says:

    Are they the same British businesses that were all in favour of us joining the euro ten years ago?

  3. Dipper says:

    The main problem here is that the current European community is pursuing a policy that has a high probability of ending in disaster, and we may see the current views and power brokers swept away. In which case our long-term interests are on keeping out of this group and so be in a good position when a more sane regime comes in.

    Businesses will always be interested in cash today. Government has to find the balance.

  4. Keith says:

    Well I assume that the reality is that the Tory party, apart from Ken Clarke, is viscerally opposed to the EU for irrational reasons as they have been for years, except for the parts they want that is namely a free trade zone. The Tories face the possibility of defections to their right on Europe, ie to UKIP and the BNP. Defections on any large scale would split the Tory voting base and let Labour win. So it may not matter what business wants. Electoral calculation is the first criteria for a party Leader.

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