The ECI Growth Survey

Foreword

By Sir Danny Alexander, Former Chief Secretary to the Treasury

British politics today centers around a simple, fundamentally important question: how should we engage with the rest of the world? Should we close ourselves off, or remain a society that is open and engaged and thrives as a result? The consensus is being questioned more now than it has been for many decades – by separatists within the UK, and by those who would leave the EU and close our borders. The results of this survey show where fast-growing businesses stand.

With a referendum on Britain’s place in the EU due in the next 12-18 months, it is striking that 91 per cent of those surveyed wish Britain to remain in the EU. That the largest group wish us to stay in irrespective of any renegotiation tells us just how important staying in is to most businesses. This should be encouraging to the majority in the current government who want Britain to remain, as well as showing once again just how high the stakes are for the British economy.

ECI’s research gives us clues as to why business opinion is so overwhelmingly pro-Europe. Exporting businesses see Europe as a key market. Firms facing skills shortages can recruit across the EU. Many foresee negative consequences of ‘Brexit' for their businesses.

This clarity should be important to voters, particularly as these views come from the entrepreneurs who will drive British growth in the coming years. As in the Scottish referendum last year, the economic consequences of separation must be central to the debate. This Growth Survey provides a clear message from business that no good will come of exit. Many rightly believe serious harm would be done. Now is the right time to express these views.

There is a practical message for business too. The referendum presents a serious business risk. Even if the chance of the UK voting for exit is as low as 20 per cent, this is something every company needs to examine and prepare for.

My experience in Scotland was that when businesses examined the consequences of separation from the UK in detail, the risks multiplied as new issues were discovered. In truth, the public debate in Scotland underplayed the risks. The sooner companies understand the precise effects, the better for shareholders, investors, managers and staff. As that process continues, the numbers foreseeing few consequences from exit will undoubtedly fall.

This survey also provides further evidence that the UK economy is recovering after the 2008 crisis. Firms are finding it easier to access the finance they need to grow, the vast majority have seen their productivity increase, and many are experiencing a tighter labour market. But it also highlights several significant risks.

Businesses that export are the most productive; growing Britain’s exports must be one pillar of a serious productivity plan. So the skills shortages being experienced by most respondents to this survey are a real headache, particularly where IT specialists are concerned.

Most firms facing a lack of skilled workers say they can meet their needs within the UK. But for a substantial minority, workers from overseas are essential. One in five firms is looking to the wider EU single market to recruit staff in shortage areas, one in ten is bringing in specialist staff from the wider world. They are right to do so.

This survey shows that fast-growing businesses are as liberal as they have ever been on how open Britain needs to be. To thrive in a highly competitive global economy Britain needs to be engaged in Europe, to win new markets all over the globe, and to welcome the skilled workers we need from wherever they come. There is much work to be done to ensure the majority continue to share that view and business will need to play its part in that too.

Sir Danny Alexander

Former Chief Secretary to the Treasury