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Survey: British and German companies regard Brexit as a threat

British Euro-sceptics are busy drumming up support in favour of Britain’s withdrawal from the EU, promising the public that it is the road to prosperity. But according to business leaders and economists on both sides of the Channel, Britain’s interests and benefits clearly lie within the EU.

Four out of five business leaders in the UK and Germany have clearly expressed their opposition to a withdrawal of the United Kingdom from the European Union, a notion that will be put to the vote in a referendum planned by the UK government. If the withdrawal were to go ahead, they predict numerous negative effects for employment, revenues and investments within their own sectors and businesses. This overwhelmingly negative assessment has been expressed across the spectrum of different industries and in both countries, and has come to light following the latest survey by the British Economist Intelligence Unit, on behalf of the German Bertelsmann Stiftung.

The findings show that 79% of entrepreneurs, managing directors and executive employees surveyed wanted the United Kingdom to remain in the EU. In Germany, this percentage was 83%, just a little higher than the 76% of those surveyed in the UK. The sectors most in favour of remaining in the EU are the manufacturing industry, IT and technology companies, and retail and consumer goods industries, with over 80% of those UK representatives strongly expressing an opinion to stay. This clear result surprised the lead researchers, as it had been assumed that the Brexit represented a “best case scenario” for the British. Should it go ahead, the United Kingdom would only leave the EU as a political entity, while it would remain a member of the internal market. This means that the country would enjoy a status similar to that of Switzerland or Norway.

According to those companies surveyed on both sides of the Channel, they fear that this partial exit from the EU would give rise to significant adverse effects for the economy. 42% of respondents foresee negative or even very negative effects for their respective job markets; only 13% believe that such a move would have a positive impact on national employment rates and unemployment levels. At 44%, these fears are somewhat more pronounced in the UK than in Germany with a figure of 39%.

Business leaders are concerned about a number of negative effects for their own economic sectors, with 38% of respondents worrying about a negative impact on sales, 33% concerned about changes to investments and 34% citing employment issues. The results show that companies in the United Kingdom are more pessimistic about the situation than those in Germany.

Many respondents also see these issues as a real threat to their own companies. Three years after a United Kingdom exit from the EU, 36% expect a decline in sales, 31% a drop in investment and 29% envisage that there will be negative consequences for a number of employees in their companies.

Most evident was an expectation that there would be an impact on corporate decision making with almost a third (29%) of all companies surveyed in both countries wanting to either reduce capacity in the UK or relocate elsewhere, a figure that applied equally to German companies (29%) and British (28%) alike. The IT sector led the way with 41% of respondents expressing these policy intentions, followed by 33% of financial institutions, who expect a reduction or relocation of capacity away from the UK.

For Aart De Geus, Chairman of the Bertelsmann Stiftung, the survey is a clear endorsement for the UK remaining in the EU: “On the eve of the negotiations, business leaders on both sides of the English Channel are telling us that we all have much to lose in the case of a Brexit. Fears for job losses and drops in prosperity are real threats. European heads of government therefore have an enormous obligation to find compromises.”

The survey also found business leaders warning against certain compromises and shows up some areas of uneasiness. As the greatest benefit of EU membership, 52% of the companies surveyed cited membership of the common internal market, with 22% stating the pan-European employment market. When asked about the most serious problems, 34% focussed on complex EU regulations, with 22% fearing uncertainty about the future of the Euro.

According to an earlier study by the Bertelsmann Stiftung a Brexit would have long-term negative consequences for the country’s growth dynamic and economic vitality. In 2030 GDP per capita in the United Kingdom could be up to 3% lower than if the UK would remain in the EU.

The survey was commissioned by the Bertelsmann Stiftung and carried out by the Economist Intelligence Unit between the months of November and December 2015. From the 782 corporate representatives surveyed, 404 (52%) had their headquarters in the United Kingdom, and 378 (48%) were in Germany. The four most represented sectors in the survey were “Finance” (130), “Consumer goods/Retail” (108), “IT/technology” (110) and “Production” (163). Respondents were all heads of department or higher in their companies, with 346 respondents at C-level (CEO, CFO, etc.) or higher. All companies had a minimum annual turnover of €10 million, and 420 companies a turnover of over €500 million. All survey results are statistically significant.

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