Business informing the Brexit debate

Tomorrow marks the start of the official referendum campaign period for remaining in, or leaving the EU.

In advance of this, we at Siemens, decided to release a formal statement on our EU position and shared this with our 14,000 employees here in the UK.

You can see this statement here.

We are not the first company that has done this and we took this decision because we had begun to get more questions  from our employees about what will happen to Siemens in the UK, if there is a leave vote.

We have in the past been criticised by the leave campaign for expressing opinions on this topic. I however find it entirely appropriate and indeed necessary for business to continue and help inform the debate as we near the referendum. Siemens is a major employer and investor in the UK and a major part of the debate on Brexit is about the economy. As ever, we have also made clear that this is a decision for the British people and hence this and other statements we have made on the issue explains what Siemens thinks about this issue, and is not telling our employees how to vote.

One of the benefits of the EU we mention, is the benefit of the UK participating in pan-EU research initiatives, which will help to shape the industries of the future. This kind of EU collaboration was the topic of a discussion I participated in with other business leaders at Downing Street this week. I described a new EU based partnership that Siemens is developing with Airbus to develop hybrid electric propulsion systems for Aircraft of the future. I’m very hopeful that a number of UK Universities will participate in this research programme – and in that way create commercial opportunities for engineering and manufacturing companies large and small to get involved in the UK – and ultimately create jobs for that exciting future industry here. I’m very sure that if a Brexit did occur, most of these jobs will be created in continental Europe and not here.

It was great to see EU based business fully aligned at this meeting and totally committed to a better and stronger EU, and wanting Britain to remain at the very centre of that.

Picture of the business team in the Number 10 gardens is attached. The team included the CBI (who organised the event) and the equivalent business representation organisations in Spain, France, Germany and the Netherlands. Together the representation organisations from these four EU countries alone have created and maintain £377bn worth of investment in the UK and represent 3.3 million companies.

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Sovereignty or Interdependence?

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As I continue to participate in many EU referendum debates, I have a strong feeling that the ‘remain’ campaign is winning the argument regarding the economy. All credible studies and facts lead you to that conclusion. The ‘leave’ campaigners’ arguments on the same are definitely lacking credibility and certainty.

The arguments around sovereignty on the other hand, seem less clear. If we are outside the EU,  Brexiteers argue with conviction, we will be able to make our own decisions, free from the interference of Brussels.  It is a very simplistic and seductive argument, especially as most of us aren’t political theorists, and when we hear the word sovereignty, we automatically think ‘independence’, which is a good thing, right?

However, as I have thought about this more and tried to find a simple way to respond, I have started to think about how this relates to our own lives. We all like the concept of being independent and free to do as we please, but we also rely on each other to make our communities work. We are interdependent.

This  ‘independence vs. interdependence’ dichotomy has been central to the EU argument since even before we joined. And while the idea of ‘taking control’ is a good slogan, I actually think that interdependence is one of the strongest arguments for staying in, because we can see how we can apply this to our own lives.

Before coming to the UK, for example, my family lived in a large block of flats in Germany. There were about 50 families in close proximity, sharing playgrounds, washing facilities, parking etc. Now it’s obvious that this kind of community requires rules, some formal, some informal, to get along, and I vividly remember that there was one family who refused to stick to the rules and were deeply unpopular, including their children, who became ‘outsiders’ when it came to activities in the playground.  This is definitely not an argument for teutonic conformity, but even at the age of seven, I  had a basic sense that people need to work together to make friends and to be an ‘insider’.

I also quickly learnt very early on in my business life at Siemens, where we have plenty of necessary and sometimes some not so smart rules, that the only way to change the latter with success, is to work yourself into a position to change them from within and for the good of the entire corporation.

Now, take these arguments and expand them to macro-level.  No country is truly independent or sovereign.  We in Britain are interdependent, with our European neighbours in particular, when it comes to dealing with 21st century challenges, like pollution, cross-border crime, financial instability and terrorism.  Therefore, we voluntarily give up some sovereignty, pooling it with others in the EU, because together we are stronger on those issues.

It’s true that sometimes we are not happy with the rules, and indeed that they are not smart, but here too, I think we can learn from our personal experiences, where it is mostly much better to work to change the rules from within, than being ignored on the outside.  And contrary to popular opinion, the UK isn’t always on the losing side in the EU.  I speak to European colleagues and people in Brussels regularly and they tell me how important, and how much success, the UK has in making the case for free trade, reducing regulation, tackling climate change and much more. I’m therefore quite astonished by the lack of confidence in the UK to believe that we can’t be an even stronger leader in the EU, changing and improving the system from within. Because we most definitely can!

And what happens if we do run away and try to set just our own rules?  Well, it’s simple, we actually lose sovereignty.  Europe is not going away and we can’t tow ourselves into the middle of the Atlantic and try to cut ourselves off from trade and political and economic system on our doorstep. We would simply have less control over the pollution drifting over our borders; the cleanliness of our seas; the standards of financial regulation affecting our economy; the consumer and trade regulations to which our exporters and importers are bound in or out of the union; the security and economic crises sending shock waves – such as extreme migration and terrorism – deep into domestic life.  We would end up being on the outside looking in, while others make decisions which affect us.  That doesn’t feel very much like sovereignty to me.

And who is it,  that would lose out if we do decide to run away and try to become more sovereign? It will  not be the Brexiteers. It will be our next generation, just like it was the children of the family living by its own rules that I described at the beginning of this blog. The parents had made their choice  to make their own rules and to live largely in isolation. But their children had not chosen to be excluded from play and lots of great experiences.

In the same way, let’s not allow self interest and isolation ruin the opportunities for generations to come. Instead, allow them to be part of a proud outward looking Britain that is helping drive equality and better chances for all in the EU. That is the Great Britain that I have adopted as my home 40 years ago and I’d like our future generation to have the same chances Britain has provided for me.

Was the 2016 Budget enough to boost productivity and exports?


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Clearly, with predictions of a slowdown in UK growth and potential headwinds in the international economy, this was always going to be a difficult Budget for the Chancellor. It appears that he has avoided loading significant costs or policy burdens on business and the reduction in Corporation Tax is going to get a broad welcome from business, although in practice it’s more of a headline grabber, than a significant boost to the economy.

There was some good news on infrastructure investment, particularly in the North of England (£300 million for improving transportation links there and the green light for HS3) and on Crossrail 2, which is all very positive.

And tucked in amongst the big announcements on education and academies was the launch of a welcome review of how to improve the study of maths for 16-18 year olds. Siemens has a major programme to promote STEM education, the Curiosity Project, which we are passionate about in supporting this important topic area.

Overall, however, I would have liked to have seen some more ideas on productivity and for boosting exports.

The OBR has identified our relative poor productivity performance as one of the largest drags on UK’s economy.

A single budget will of course never find a ‘silver bullet’ for such a complex issue, but an obvious opportunity missed was on business rates. Companies like Siemens had argued that in their review the government should have taken steps to exempt productivity boosting plant and machinery from rateable values, so I am disappointed not to see this happen. There were also no further steps to enhance either the UK’s capital allowance regime or R&D tax credits.

I guess we’ll have to work closer with Government to help deliver more support for innovation in its forthcoming National Innovation Plan.

And there is the work of the Productivity Leadership Group, led by Sir Charlie Mayfield, which I participate in, and will make proposals to government in the Summer

So, we still have opportunities to influence and develop policy and support mechanisms that brings all of the elements together into a more coherent Industrial Strategy. This budget alone hasn’t provided very much more concrete action in that direction.

Is our press providing a balanced EU debate?

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I’m finding some of the unbalanced horror stories in our tabloid press tragic relating to this EU debate. It is actually embarrassing if looked at through the eyes of people listening in from mainland Europe (and the problem is Europeans read our news, whilst most in the UK don’t read theirs!).

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The first two headlines above deserve no comment, but take the third, which spreads fear about unruly EU migrants coming to the UK. A closer analysis of the data shows that EU migrants living in the UK are about half as likely to commit a crime than a native British person. That doesn’t mean we shouldn’t deal with the very high crime rate Britain has (one of the highest in the EU), but no evidence suggests EU migration is a root cause. Furthermore, all credible reports analysing the economic impact of EU migration on the British economy value it as hugely positive, something rarely reported on.

Now let’s look at it from the other side. One of the European cities I enjoy popping by when on holiday in Austria, is Ljubljana in neighbouring Slovenia. A vibrant and pretty city and massively improved since joining the EU. On my last visit, whilst having a coffee, we observed an extremely badly behaved group of British tourists. Drunk, loud, abusive and disrespectful. You all know the sort of scene I’m describing. I am extremely proud to have adopted Britain as my home, but in these moments, I become deeply ashamed. The real point however being the local Slovenian who reads misleading headlines like the one above about his nationals living in our Country.

This important EU debate deserves so much more openess and balance and I sincerely hope the media in question begin to take their responsibility more seriously.

I have been pleased to see some of our Regional Press taking this debate on with more responsibility. Here a good example. Well done Manchester Evening News!

http://www.manchestereveningnews.co.uk/news/greater-manchester-news/things-eu-done-for-manchester-11020085

My summary of the key EU referendum arguments so far

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Our views are invariably shaped by our background and environment and I freely admit that as someone who came to the UK from Austria and Germany over 40 years ago, I have a strong emotional commitment to the idea of European countries working together for their mutual benefit.

But I am also a business person and having spent 30 years working in the UK, always across EU markets, and now as head of Siemens in the UK, there are some hard-headed business reasons, both positive and negative, why I think we are stronger in.

•  EU membership for us, makes  Britain a better place to do business, through free trade, collaboration in research and development and being able to better influence the destiny of our UK based industries.

•  UK business  is  better served by being influential in defining the future direction of the key industries in Europe. This can only be done from within. Outside, our impact and hence the potential to grow our business here in the UK will be marginalised. The future of digitalisation, which will be the foundation of the 4th Industrial revolution is a key example. We can get on the inside, drive the standards and innovation and let British industry thrive within it. Or we can leave the EU and hope that the people in the EU will set the direction in the best interest of British business. But that sounds very naive to me, and generally speaking doing business on the margins and without influence doesn’t turn out well.

•  Brexit would hit business with significant uncertainty in already extremely uncertain times. Uncertainty is always a killer for investment and jobs.

•  Free movement of people works both ways.  The majority of our Siemens UK employees (93%) are British, but we do have skills gaps which we fill with EU citizens from time-to-time (who pass these skills on to our UK employees).  As important, we often send UK employees to the EU, helping with key skills there and bringing knowledge back to the UK.

At the same time, while I respect the intentions of many in the Brexit camp, their arguments, to me, simply do not add up.

•  They have not set out an alternative model and seem to be spending more time arguing amongst themselves about whether we should follow the approach of Switzerland, Norway or somewhere else and none of the options look attractive. Nigel Farage in our BBC debate yesterday said ‘he does not want to be part of the single market’, which would definitely mean the introduction of trade restrictions, which we currently don’t have.

•  A new free trade deal would not be handed to us on a plate. Put simply, it won’t be. If it was, then many more EU countries would take an exit path, and the EU is not going to make that path appear easy. The argument that the EU has more to lose than the UK is also flawed and incorrect. The truth is that both would be significant losers and I never subscribe to a path where the only certain outcome is that everyone loses.

•  Their claim that to leave the EU is to get control of our borders back is dubious at best. All European countries outside of the EU that have this trading privilege, e.g. Switzerland, Norway, Liechtenstein  and Iceland, have to comply to free movement of EU labour. And the UK cannot have its cake and eat it on this one either. If, like Nigel Farage implies, he will sacrifice free trade in order to restrict free movement, then we should have more honesty on that and make it clear that we will pay the price of reduced trade, business investment and jobs.

•  Brexit won’t mean a bonfire of regulation.  As a business leader I have some sympathy with this.  There are areas where we need less EU regulation.   But if we follow the Swiss or the Norwegian approach, as some are suggesting, we will still have to comply with EU regulation, we just will not have a say over it.  Also common standards and rules across the EU actually reduce non-tariff barriers and in many cases improve the competitiveness and reduce the regulatory burden on business.  On balance, EU standardization has improved the productivity of our 13 factories in the UK. It is also inconceivable that a UK government would simply ditch EU rules on health and safety or working hours, for example, and not replace them with UK equivalents . Put simply, in or out of the EU, a life with no regulation from the EU is a fantasy and whilst business often doesn’t like being regulated, in a modern global world it is just grown up business.

•  We can spend our £20 billion EU budget on things like the NHS, roads and schools. This argument is really scraping the barrel.  Firstly, the figure is closer to £10bn, when you count back our various rebates, etc.   Secondly, we would spend most of this on gaining access to a free trade agreement and access to EU research programs. The little that remains would be dwarfed by the negative effect on economic growth.

•  The new deal (negotiated by David Cameron) for the UK with the EU has achieved nothing.  Put frankly, no deal would have been good enough for most anti-Europeans.   My view from observing this from both sides of the channel, is that this negotiation has been an incredibly fine line. Of course, I can see that many in Britain would have wanted more, but looking at it from the other side, we have been seen as rebels and extremely unhelpful of the greater EU good. Being a big enough rebel to bring about change and start moving the pendulum in a trajectory of a reformed EU for the benefit of all is a good thing. Being a rebel seen as only ‘out for themselves’, would have killed the negotiations from the start. I think we have done enough to get the Brussels bureaucracy pendulum swinging in the other direction, and in the end the EU will thank Britain for having started that process. Had we pushed too far, at this point, we would have started a very negative relationship with our neighbours, which potentially could have become very bitter, with negative consequences for all.

To summarise, the anti-European side has, to me, simply not set out credible arguments for leaving and their case is based on a range of uncertainties with a rather large dollop of wishful thinking – and wishful thinking is not normally the good basis of sensible business.

But I want to end where I began, with the emotional argument for Britain remaining in the EU.  To me there is a much bigger picture here. This incredibly important debate is about the future of Britain’s standing in the world and the future of Europe’s prosperity as a whole.   And whilst the UK will always be respected for its culture, professionalism, creativity and humor, I’m convinced we will gain much more influence and respect as a catalyst for a better EU rather than heading for the exit door.   After all, Britain has usually seen its national interest as being best served by being engaged with Europe and much of the modern EU agenda – the single market, enlargement, the drive for free trade and competition – has been driven by the UK.

In short, the fundamental reasons for the creation of the European project, to bring down barriers between people and create a peaceful Europe for future generations, are as strong now as they have ever been.   My view is clear; Britain is stronger in the EU and the EU is stronger with Britain as an influential member.