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Thursday, 24 April 2014

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Why Cumbria needs Europe – but perhaps not the Euro

The dream was one big happy family, living together in peace and harmony. There have been no continent-splitting wars during the European Union’s existence. But harmony is perhaps overstating things.

Hawkshead Relish photo
Maria Whitehead

Even leaving aside the economic turmoil caused by Eurozone debt, life in the European family has rarely been harmonious for Britain. Separated by geography and culture, we have often seemed a distant cousin.

Depending on your viewpoint, we have at times also been a petulant teenager reluctant to play by the rules, or an exploited parent bailing out its feckless siblings.

Thirty-eight years after Britain joined the European Economic Community, as the EU was then known, Carlisle MP John Stevenson this week voted for a referendum on pulling out.

He was one of 81 Conservatives to rebel against the Government, and the sole Cumbrian MP to back the motion.

Mr Stevenson said: “We need to have a proper debate about our relationship with Europe. People are generally accepting that too much legislation is coming out of Europe that’s hindering our economic recovery.

“A lot of people have contacted me wanting the opportunity to have their say. It doesn’t necessarily mean they want to take us out of Europe, it may be that they want some sort of re-negotiation.”

This week European leaders met in Brussels to tackle the Eurozone debt crisis. They emerged yesterday with an agreement to boost the bailout fund to one-trillion Euros.

Private banks holding Greek debt have accepted a loss of 50 per cent. Banks must raise more capital to protect them against losses resulting from any future government defaults.

As a country which is not one of the 17 to have adopted the Euro, Britain’s influence on the debate was limited.

But the effects of debt, and all other aspects of the EU, are part of daily life across the nation, including this corner of England.

The European Union is Britain’s major trading partner. In 2008, 57 per cent of our exports were sold to EU countries. Of the products we imported, 55 per cent came from the EU.

Against this background, what do Cumbrian businesses think of calls to pull out of the EU?

Suzanne Caldwell is enterprise development manager for Cumbria Chamber of Commerce: the county’s biggest business group with 1,400 members employing 60,000 people.

“Being in the EU does make business easier,” she says. “We’re not in the Euro, which adds a level of complication, but maybe we should be relieved about not being in the Euro right now.

“There are an awful lot of Cumbrian businesses exporting to Europe – far more than you would think. Especially with the internet. A lot of people that wouldn’t necessarily call themselves an exporter regularly get orders from Europe.

“Being part of the EU does make things a lot more straightforward. Gone are the days when businesses had to go through numerous testing and accreditation processes to be able to sell products already approved for their home market in other European countries, and of quotas and other barriers to our products elsewhere in Europe.”

All 27 EU members operate a single market, with no internal tariffs or quotas. Firms selling to the single market have unrestricted access to 500 million customers.

So what’s not to like?

“The drawback has always been, you have to fall in with what the rest of the European Union is doing as opposed to having your own arrangements,” says Suzanne.

“Membership of Europe has affected our ability to act unilaterally, on trade and other issues.

“And Europe is time and again cited as the cause of so much regulation and additional cost to businesses, although many of our European cousins seems to interpret some of these same rules rather differently.”

John Chapman Limited, based at Harraby Green Business Park in Carlisle, makes high-quality travel and sporting bags. About half their products are exported and Europe is a major market.

Chief executive Daniel Chamier says: “There’s no doubt that being able to sell into a single market is extremely advantageous.

“Another important market for us is Japan. Not being in the same market doesn’t stop us exporting there but it is more complicated.

“We have to pay import duties of up to 20 per cent. In the USA it’s 5-10 per cent. There’s more paperwork. It’s a much more cumbersome process. Our goods have to go through customs. They can get stuck there for a while.

“We have a huge market on our doorstep in the EU and we can export to any country there without hindrance. It just goes straight through – thank you very much.”

He can think of no disadvantage to EU membership. So why the dissatisfaction from many Brits?

“We’re not talking about business-related attitudes. It’s more about peoples’ opposition to being told what to do by ‘bureaucrats in Brussels’.

“I think it’s difficult for people to appreciate the advantages unless they are at the sharp end of business.

“And wanting to have a referendum is not necessarily the same as wanting to leave the EU.”

Hawkshead Relish makes more than 100 varieties of handmade preserves from its Lake District base. Run by husband and wife Maria and Mark Whitehead, the company has won more than 40 national and international awards. The most recent was Exporter of the Year at last week’s CN Group Business Awards.

“You think it’s going to be a lot easier within the EU,” says Maria. “For us I don’t think there’s a huge difference.

“Some of the paperwork is slightly less rigorous within the EU but we still have to go through the same sort of documentation as elsewhere.”

The one-size-fits-all principle does not apply in all areas of the single market. Food labelling rules differ across the Union.

“Every country has its own unique needs and requirements. Things like nutritional information: some countries require it, some don’t. Some have banned a particular type of fruit acid. If a product has that in they will just destroy it.” But at least there are no tariffs to be paid on exporting goods to the EU, unlike some of Hawkshead’s other markets.

“If you’re sending a homegrown product back to America – for example, cranberry jelly which was made with American cranberries – there’s a huge import duty.

“They’re encouraging Americans to buy products that are made in America. And I think that’s a good thing. We should be doing that.”

Aside from the business arguments, Maria describes herself as a supporter of the EU, with reservations.

“I think we’re better to stay in and have a voice than to be on the outside and have no say in how the EU is governed.

“We’re not just their neighbours – we’re part of it. I don’t think a lot of people that say we should get out realise how deeply ingrained we are. A lot of funding for businesses in this country is from the EU. The regional funding has gone.”

In terms of drawbacks, she cites a feeling that the EU and institutions such as the European Parliament have not grasped the need for belt-tightening.

“I think there’s a lot of wastage. There needs to be some tough decisions as there have been in the UK. We hear these stories about MEPs and their long lunches.”

Not all business people are convinced that Europe is the promised land. Richard Elsy is marketing director of Penrith-based Jaybox, which sells broadband-based music systems to pubs.

He spent more than 20 years as a freelance international development consultant, working with institutions including the World Bank and the European Commission.

“I’m not persuaded that anything about Europe other than the single market represents an asset to businesses in this country,” he says.

“I think the single market is important. But that’s not the totality of the EU, and the European Commission and the European Parliament.

“We joined a common market and ended up with a monumental European integrationist project.”

He believes some EU regulations are not conducive to expanding a business.

“The 35-hour working week for one thing. And contracts for agency workers that will mean huge additional costs to small- and medium-sized companies that require flexibility to bring people in when they need them.”

Richard feels that even if Britain pulled out of the EU our neighbours would still allow us to trade in the single market – because trading with Britain benefits them more than us.

“Given that we have a negative balance of trade with the other countries in the EU, I don’t think they would want us to leave. They get more out of trading with us than we do out of trading with them.”

While this week’s Brussels agreement may have calmed things down, the European family is likely to start squabbling again sooner or later.

Britain’s own rows will rumble on, not least whether to sit at the head of Europe’s table or somewhere on the outskirts.

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