Chris Cummings: The UK should lead change in Europe

In the heat of the on-going debate about whether the British people should have a referendum on Europe, it’s easy to forget how much The UK has benefitted economically and socially from our forty year plus membership of the European Union.

Historically we ‘ve done best when we have led from the front in Europe, whether it’s our pole position in the development of the Single Market or when negotiating vital opt outs and safeguards including in the Banking Union which would disadvantage our national interest.

We’ve led the charge in helping to frame EU financial services law, including most recently the Markets in Financial Instruments Directive and the Market Abuse Directive, both based on UK law. They mark a strong recognition of the UK’s leadership in European financial services. Indeed, the framework of EU financial services legislation is crafted far more in the image of the UK than is generally acknowledged.

This of course supports our capital city which functions as the global marketplace for EU and international firms. London is Europe’s financial centre and is hugely important to the continent’s ability to finance growth and create jobs, attracting global investors to the EU through the City as the gateway to the Single Market.

The access London provides to a global capital market within the EU’s borders helps to reduce the cost of raising finance for firms and that means shareholders get a better deal - improving the returns we get in pensions paid to every European citizen. Ultimately it’s London’s strength and size in the EU that enables it to lead the world in financial and professional services, to the betterment of Europe. Threaten this, through the imposition of uncompetitive measures such as the proposed Financial Transaction Tax and not just the UK, but the whole of the EU will suffer the economic consequences.

When we joined the European Community in 1973, then Prime Minister Edward Heath commented that membership would “enable us to be more efficient and more competitive in gaining more markets not only in Europe but in the rest of the world”. Research out this week from TheCityUK on the economic case for our membership shows this ambition has been more than realised.

Today the UK benefits from the EU as the world’s largest market, with 25% of global GDP, accounting for 45% of UK exports and 50% of UK imports. Over 80% of UK firms that trade overseas do business with Europe.

Tellingly, our economic research shows that around 60% of UK goods exports fall under the umbrella of EU trade agreements, rising to 85% if current EU trade negotiations are successful. It is clear that the EU has a positive impact on driving UK trade and economic growth and particularly benefits our most productive firms - those that export.

Our research also shows that alternatives to EU membership would be costly for business and finance, with significant challenges in any negotiations, risking damage to the UK through uncertainty, reduced market access and loss of influence. If the UK became a member of the European Economic Area and the European Free Trade Association, today's level of access to the Single Market would not be guaranteed. We would still have to implement all relevant EU legislation but have no say in how it was framed.

Economic prosperity is built on strong alliances and for us that has to mean stronger bonds with our EU neighbours. There is a clear need for EU reform, to have a Europe that works for every member state, but this can only be achieved through the UK being a full blooded member of Europe and leading the reform debate.