CBI President on EU reform and the referendum

25 Jan 2016 01:15 PM

CBI President, Paul Drechsler, is featured in the Mail on Sunday discussing the UK's relationship with the EU. The full interview is below:

The Prime Minister threw down the gauntlet to business last week, calling on its leaders to make their voices heard on Europe. Paul Drechsler, President of the Confederation of British Industry, has taken up the challenge without a moment’s pause.

The employers group has clashed with campaigners against EU membership, with its critics claiming business is far from united behind Europe and some calling for the CBI to withdraw from the debate. Drechsler is doing no such thing.

If anything, his latest comments are more forceful than ever. A British exit from Europe will hit economic growth and could lead to years of uncertainty. ‘The economics we have looked at is that the impact of leaving would be 3 to 5 per cent off the UK economy – that’s about £3,000 per household. I have never met anyone in business who says it would be really good for them if economic growth was slower,’ declares Drechsler.

And he warns exit could lead to years of tangled negotiation. ‘Brexit means a significant period of uncertainty of at least two years while we work out the framework for our exit and the other 27 countries decide what they want to do. That’s two years of uncertainty and then however long it takes us to renegotiate trade deals.’

Eurosceptics often point to Switzerland or to Norway as a model, which are members of the European Free Trade Association, but not full EU members. ‘I think it took Switzerland nine years to do individual trade deals with all the countries they wanted to. Norway is half in and half out and that means they are living with all the issues they would have if they were a full member.

‘Look, you cannot sell your products in Europe without meeting European regulation and that is not going to change if we come out. You know we have to be careful that we don’t think there is a great new world out there for us to have.’

Drechsler himself is a model of the modern international executive. At first glance a bluff, plain speaking Irishman – he is in fact a rather cosmopolitan figure by background and by career. Although born and bred in Dublin, his father was Czech. After an engineering degree at Dublin’s Trinity College he went to work for ICI, that once great beacon of British industry, working first in Teesside and the North of England and later in Latin America and then in the US before eventually returning to London.

His business experience since ICI has not been in listed blue chip companies, but in private family-owned companies – albeit very big ones – starting with Wates. Currently he is chairman of Bibby Line Group, which is best known as a Liverpool-based shipping company, but it also owns financial services businesses and the Costcutter chain of convenience stores.

Drechsler believes all of this gives him an extremely broad grasp of the economy and of different industries – a great overview for his CBI role. He is talking to The Mail on Sunday in the CBI’s steel and glass offices in the City. Behind him stretches the London skyline including the iconic St Paul’s Cathedral and, crucially for Drechsler, lots of cranes.

The former building group chairman regards the ‘crane count’ as a useful measure of the health of the construction industry and therefore of the wider economy. There are indeed plenty of them. ‘The performance of the UK economy is about as good as it gets in world terms,’ says the 59-year-old. ‘It’s not good by the standards of the old days, but it is good.’ That, he warns, is what an exit from Europe could put at risk.

Much of the time, Drechsler speaks in the same measured tones as David Cameron. He warns Europe is not perfect and he insists that reform is necessary. He points out that politicians in Europe must take seriously the possibility of Britain leaving. But his heart is quite clearly for EU membership.

‘Our right to enter the debate is about what we believe will create the best opportunity for business and economic growth,’ he says. ‘Business leaders should be talking relentlessly to their employees, to their suppliers and their customers about this.’

Crucially, he adds he is not trying to dictate to the public. ‘This is not about going out telling people how to vote; this is about going out to talk about what is happening in the world and how it will affect our businesses.’

Critics fear that the CBI is too focused on its bigger members, who are generally thought to be more pro-EU than smaller firms. Drechsler bats back this claim with a dash of dry humour. ‘The first thing I would say is that we have 190,000 member firms. The last time I looked there were only 100 FTSE 100 firms so we don’t only represent big business.

‘The second thing is that of course there are businesses who just trade on the high street, but whether you want to trade in the US, India, in Europe or just in the UK, it is far better if the economy grows at 3 per cent rather than declines by 1 per cent.’

Eurosceptics would dispute the analysis of the risk to growth, but Drechsler is resolute. ‘I have seen nothing that shows if we leave Europe, it will be better for economic growth.’

The CBI has a packed agenda at the moment thanks to a flood of Whitehall initiatives and while Drechsler appears to sing from the David Cameron song-sheet on Europe, he is less supportive of certain other Government policies.

The CBI has been critical of efforts by the Government to tighten the rules governing how skilled potential immigrants obtain visas. He argues that the process is too slow and cumbersome. ‘I was with the MD of a business this morning and she needs the best engineers and technologists she can get. When you are a technology company and you need talent, you need it now. To take weeks is a long time, so the sort of visa process we have needs to get with the times. We are caught in a process from the 19th Century when we are in the 21st.’

He is also critical of the Apprenticeship Levy and auto-enrolment for company pensions. ‘When you add up all the interventions [from Whitehall] I think you will find the net impact on the taxes paid by corporations is up, not down,’ he says.

Away from the business hurly-burly he is a dedicated Eric Clapton fan and a keen skier. So why was he not with other CBI executives in Davos, the snow-covered Swiss resort where so many business leaders were in conference last week? ‘Imagine being stuck in a conference room when you know you could be outside skiing,’ he jokes.

And so our time is up, but unprompted Drechsler wants to re-emphasise the importance of the EU issue. He says: ‘I think we are dealing with one of the most important issues for this generation, so we must promote discussion so when people vote on this they do so with understanding and make it a contribution to the future of the country.’