Aerospace, defence industry backs Britain's EU membership — survey

LONDON — The majority of British aerospace, defence, security and space companies believe that the country should stay in the European Union (EU), the latest business group to come out in favour of staying in the bloc.

The economic impact of a 'Brexit' is one of the key issues for voters ahead of a referendum on Britain's EU membership on June 23.

ADS Group, the industry body for aerospace, defence, security and space companies in Britain, said that 70 per cent of its members believe it would be better for their business if the country stayed in the EU.

"Our members recognise the benefits of the UK remaining part of the EU; access to integrated European supply chain; research and development funding which enables the UK to compete globally, and the ability to influence and shape EU regulation," ADS Chief Executive Paul Everitt said.

Members of the ADS group employ 310,000 people in Britain and generate £31 billion in exports for the country. The  survey was carried out in February and March, ADS noted.

Planemaker Airbus, which employs 16,000 people in Britain building wings for its aeroplanes amongst other activities, said in February that its British operations would be less competitive if the country voted to leave the EU.  

The industry's view echoed the bosses at more than a third of Britain's biggest companies including oil giants Shell and BP and its largest telecoms group, who said leaving the EU would put the economy at risk, backing Prime Minister David Cameron's call to stay in the bloc.

Nearly 200 companies, among them 36 FTSE 100 firms, including telecoms group BT, retailers Marks & Spencer  and Asda, and oil firms Shell and BP, signed the letter which put forward the economic merits of EU membership.

"Business needs unrestricted access to the European market of 500 million people in order to continue to grow, invest and create jobs," said the letter, published in the Times newspaper. "We believe that leaving the EU would deter investment, threaten jobs and put the economy at risk."

London Mayor Boris Johnson, who as mayor presides over one of the world's pre-eminent financial centres, dismissed the significance of the letter from the business leaders.

Spreading alarm

"There will be people who try to spread alarm, anxiety," he told reporters, saying the same people had been wrong over Britain's decision not to join the euro and to exit the European Exchange Rate Mechanism 20 years earlier.

Other commentators said the potential boost for Cameron was limited given that two-thirds of top bosses had not signed up, including those from its two biggest retailers.

Tesco, Britain's biggest private employer with 310,000 staff, said the referendum was a decision for the people of Britain and that its focus remained on serving its customers, while Sainsbury's, the country's second biggest supermarket, said it was an apolitical organisation.

"I suspect that the numbers [of FTSE 100 bosses] giving support to remain publicly have been a disappointment," said Andrew Hawkins, founder of polling firm ComRes.

In another survey published by the Institute of Directors, six in 10 of nearly 700 of its members polled said they planned to vote to stay in the EU.

Scottish experience

"I can tell you this, if the leave campaign could produce 35 business leaders of this sort of stature, they'd be over the moon," Cameron said of the business leaders' letter during a visit to Slough, west of London.

"This is simply people running some of the largest businesses in our country that employ over a million people between them, saying this has real consequences for our country," he added.

Economic concerns played a role in the Scottish independence referendum in 2014, when in the weeks ahead of the vote, big companies warned about the impact of leaving the UK on investment and jobs, adding to a climate of fear, and possibly swaying some votes to help keep that union in tact.

As a result, some voters pledged to boycott firms wading into politics and perhaps wariness from that experience deterred some of Britain's biggest employers from signing the letter.

Cameron's move to call on the voice of big business, the letter was arranged by his Downing Street office alongside the “Britain Stronger in Europe” campaign, was not without risk as "Out" campaigners cast the EU as the instrument of a global elite which is out of touch with ordinary Britons.

Jim Mellon, a fund manager who is helping fund the "Out" campaign, told the BBC the signatories were mostly people who had "crawled their way up the corporate ladder" rather than "true entrepreneurs" who had started new businesses.

The stakes are high in the June referendum. A vote to leave would not only transform Britain's future in world affairs, but also shake the EU, which has struggled to maintain unity over migration and financial crises, by ripping away its second-largest economy.

Some companies do, however, favour an exit from the EU. 

The campaign for Britain to leave the EU has been backed by 250 business leaders including the former chief executive of HSBC, the Vote Leave group said last week, hoping to counter the view that UK businesses back staying in the bloc.

Vote Leave, one of the groups supporting a British exit, unveiled its own list of backers including Michael Geoghegan, former chief executive of HSBC Group, John Caudwell, founder of Phones4U and Tim Martin, the boss of pubs group JD Wetherspoon.

"With our growing list of business supporters, Vote Leave will make that case that whilst the EU might be good for big multinationals, for smaller businesses it acts as a job destruction regulatory machine," Matthew Elliott, chief executive of Vote Leave, said.

Vote Leave also said it was forming a Business Council to argue that EU membership was holding back business.

That group will be headed by John Longworth who quit as director general of the British Chambers of Commerce (BCC) lobbying group after he spoke out in favour of leaving the EU, accusing Cameron of trying to scare voters into backing his case to stay in the bloc.

The Bank of England (BoE) warned last week that uncertainty surrounding Britain's looming referendum on EU membership could send the pound slumping further and boost financing costs.

The central bank's Financial Policy Committee (FPC) declared that the risks surrounding the vote represented "the most significant near-term domestic risks to financial stability", echoing recent comments from BoE Governor Mark Carney.

Uncertainty over the outcome could spark a "further depreciation" in sterling, the FPC warned in minutes from its March meeting, adding it could also adversely affect "the cost and availability of financing for a broad range of UK borrowers".

In late February, the pound had tumbled to a near seven-year low against the dollar on mounting fears that Britain could leave the 28-member EU bloc.

The FPC cautioned on Tuesday that the nation's potential EU withdrawal could "spill over" into the eurozone and weigh on the currency bloc's growth prospects.

It added that the outlook for Britain's financial stability had "deteriorated" since its previous meeting in November, citing increasing global economic risks and the threat of Brexit.

However, the FPC noted Britain's major banks had passed stress tests designed to show their ability to survive a severe economic shock, such as a sharp drop in sterling or a prolonged recession.

Last month, the BoE announced it would make extra cash available to banks around the time of the referendum, in order to help overcome market turbulence and the risk of another credit crunch.

Carney had already warned on March 8 that Britain's departure from the EU would create the "biggest domestic risk" to the nation's financial stability.

US Treasury Secretary Jacob Lew also warned that If Britain exits the EU it will have a negative impact on the British, European and world economies.

The consequences of a Brexit, in terms of the flow of trade and economic relationships, would have far-reaching repercussions, Lew told Charlie Rose on public television PBS.

"I don't think it's good for the European, or the British economy, or the global economy," Lew said, adding: "And in a world where one of the things that drives the economy is the uncertainty of geopolitical risks... 

"It is clear that when you increase the level of unease, it has an economic consequence."