Monday, 16 February 2015

What do British business leaders think about the EU?

The other day I came across a fascinating YouGov poll examining British business leaders' attitudes toward the EU. The poll, which was conducted on behalf of Business for Britain, sampled 1,024 business leaders in September of 2013. It achieved good representativeness with respect to region, and moderate representativeness with respect to firm size (large businesses were over-represented), industry (services were over-represented, construction under-represented) and exporting status (exporting businesses were over-represented). For further details on methodology, see pp. 6-7 in the report.

The first major finding of the poll was that a sizeable majority of business leaders support holding a referendum over EU membership within the next few years: 66% were in favour of doing so, 26% were opposed, and 9% were unsure. This majority obtained for small, medium and large businesses, and for both exporting and non-exporting businesses.

The second major finding was that a plurality of business leaders would prefer renegotiating the terms of Britain's membership to leaving the EU altogether. When asked how they would vote in a referendum over EU membership: 49% said they would vote to stay in, 39% said they would vote to leave, and 11% said they were unsure.

The third major finding was that a plurality of business leaders think the costs of EU regulation outweigh the benefits of being in the EU: 46% said the costs outweigh the benefits, 37% said the benefits outweigh the costs, 8% said neither, and 10% said they were unsure.

Interestingly, as the chart above indicates, small business leaders were more likely than large business leaders to think the costs of EU regulation outweigh the benefits of being in the EU. There are a number of possible explanations for this. First, small businesses may be less likely to export to the EU than large businesses. Second, EU regulations may be more burdensome for small businesses than large businesses. Third, small business leaders may be more opposed to the EU for reasons unrelated to regulation, such as being against European integration.

From the perspective of the country as a whole, who is more likely to be right on this particular issue: small business leaders or large business leaders? There is at least one important reason to think it is the small business leaders, namely that small businesses generally can't use government to benefit themselves the way that big businesses can. As Milton Friedman explained,   
You know it's an interesting thing if I look at the behaviour of business organisations. If I look at the NAM or the Chamber of Commerce, on any given issue they're as likely to be on the wrong side as on the right side. The only organisation that is almost always on the right side is the National Federation of Independent Business. Why? Because it represents small business. Why? Not because small businessmen are nobler than big businessmen. But because they know they can't get anywhere through government, while the big businessmen can. 

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