David Cameron’s decision to hold a referendum on the UK’s membership of the European Union (EU) – assuming the Tories win the next general election – has met with approval from leading business groups.
The Prime Minister said he would seek to renegotiate the terms of the UK’s membership of the EU, adding that if he was satisfied with the outcome of talks he would campaign “heart and soul” for the country to remain a part of the European club.
Philip Law, public and industrial affairs director of the British Plastics Federation (BPF), noted that the world was changing and that those institutions that remain static would not be able to survive.
"We want to see an EU that provides a harmonised market with light touch legislation to facilitate internal trade and one which takes advantage of the greater economies of scale which will enable the EU to compete successfully in the global market place.
“There are serious question marks against the EU's success in delivering these. The debate isn't one for the UK exclusively. It's something all EU states should face up to.
"It will reduce the uncertainty for business if the Prime Minister can find allies amongst other, substantial, member states.”
Simon Walker, director-general of the Institute of Directors (IOD), said Cameron’s approach was “realistic and pragmatic”, since doubts about many of the institutions and practices of the EU needed to put to rest.
“Free movement of goods and people is enormously important for the British economy, and we need to preserve that situation. At the same time, there are serious concerns about large amounts of costly regulation being introduced through unaccountable processes.
“A future referendum to decide the workings of our relationship is the best way to affirm Britain’s participation in a free-market Europe which is competitive and deregulated.
“The Eurozone crisis is the source of far more uncertainty than a referendum. Most IoD members export, the majority of them to the EU. It is in everyone’s interests for that trading relationship to continue – and I am sure it will,” Walker said.
John Cridland, director-general of the Confederation of British Industry (CBI), agreed but with a similar caveat: “The EU single market is fundamental to Britain’s future economic success, but the closer union of the Eurozone is not for us.
“The Prime Minister rightly recognises the benefits of retaining membership of what must be a reformed EU and the CBI will work closely with government to get the best deal for Britain.”
The vast majority of UK businesses wanted the country to remain in the single market, said John Longworth, head of the British Chambers of Commerce, but on the basis of a revised relationship with Europe that promoted trade and competitiveness.
"It is of critical importance to business and to Britain’s national interest that we have access to the European market, but not at any cost. On this basis, the Prime Minister’s determination to negotiate a new settlement for Britain is the right course of action.
“The Prime Minister must seek an ambitious and far-reaching settlement. We start with a strong negotiating position. We run a trade deficit with the EU, so it is not in Europe’s interest to see the UK go," he added.
Until last summer the EU had been the UK's largest export market, but the Office for National Statistics revealed in July that exports to markets outside the European Union were greater than to those within it for the first time since the UK joined the Common Market in 1973.
In what is being seen in some quarters as a bid to unite his party as it seeks to win an outright victory at the next general election David Cameron said a referendum would be held by the end of 2017 at the latest, assuming the Conservatives held a Parliamentary majority.