The Role of Business In The EU Referendum

The role of business during the present EU referendum campaign has been hotly debated.

The British arms of multinational companies such as Ford and Airbus have been vocal in supporting the Remain campaign, while Wall Street’s big battalions, such as Goldman Sachs (NYSE: GS-PB - news) and JP Morgan, have contributed generously to the campaign.

The CBI has thrown its weight behind Remain, although some other business organisations have remained studiously neutral, such as the Federation of Small Businesses and the British Chambers of Commerce, whose director-general was obliged to resign after he spoke out in favour of leaving the EU. The Leave campaign, while not enjoying quite as much support from business, has still been able to call on the likes of Lord Bamford, of the JCB digger dynasty and Sir James Dyson, founder of the appliances empire that bears his name.

But what was it like in June 1975 and the referendum then? The situation was very different in those days. There was absolutely no sitting on the sidelines – just about every business leader in the land supported remaining in what was then called the European Economic Community. Then, the EEC – also widely known then as the ‘Common Market’ - was unashamedly an economic construct, with no-one in its upper reaches talking, as some leading figures in the EU have since, about a political union. Moreover, in a world still recovering from the 1973 oil shock and in which growth was hampered by very high trade barriers around the globe, the EEC was a bulwark for freer trade and lower tariffs.

For many British business leaders, there was another reason: in October the previous year, Labour had been returned to office under Harold Wilson. Britain was already the ‘sick man of Europe’ and Wilson’s response, as promised in the Labour manifesto the previous year that also pledged a referendum on EEC membership, was an Industry Act replete with planning agreements between “the Government and key companies to ensure that the plans of those companies are in harmony with national needs and objectives” and that threatened full or part nationalisation of companies.

There was no reason for business leaders to think Wilson (Oslo: WILS.OL - news) would not follow through with that threat: in 1967, he had nationalised the UK’s 14 largest steelmakers to create British Steel, while it was already being widely signalled that a nationalisation of carmakers – into the ill-fated British Leyland - was looming. And even Edward Heath’s Conservative government had nationalised the ailing Rolls-Royce in 1971. So the EEC was seen very much as a free market bulwark against the onset of Wilsonian socialism.

By contrast, whereas the old EEC was seen as a bastion of free trade opposed only by those who supported protectionism, the EU now is seen in some quarters – such as by critics of its farms policies - as propping up protectionism. Those campaigning now to leave the EU, instead of wanting more protectionism as in 1975, now mainly argue that Britain could enjoy even freer trade outside it. That is why business is not as uniformly behind Brussels as it was 41 years ago.

So uniform, in fact, was the business world’s support for remaining in the EEC in 1975 that no mention of any business leaders was made in the official campaign literature. There was no need to because there were no business leaders of note campaigning to leave the community and the general assumption was that business backed the case for remaining overwhelmingly. The only non-politicians mentioned in the official ‘Britain in Europe’ leaflet was Baron Plumb, the National Farmers Union president and Vic Feather, the then general secretary of the Trades Union Congress, whose support was crucial because union membership was much higher then and because many unions and their leaders favoured leaving.

That is not to say that business did not campaign vigorously to remain in the EEC. The CBI – which spent the modern-day of equivalent of £500,000 on the campaign - acted as a “clearing house” for companies in helping them put together publicity material and workplace displays that could be used to persuade employees to vote. It (Other OTC: ITGL - news) even helped train people to make the case for the EEC in offices and factories. Tesco (Xetra: 852647 - news) even produced carrier bags for shoppers emblazoned with “Say Yes to Europe”. And numerous company chairmen and chief executives wrote to their employees and members of their pension schemes urging them to vote to remain.

By contrast, fewer companies have been as proactive this time around, with Tesco and the other major grocery multiples – perhaps mindful of the pushback they received from customers when they campaigned for Scotland to remain part of the UK – staying decidedly neutral. Ryanair, the budget airline, has been one of the few major consumer-facing businesses that has contacted customers directly to try and persuade them. Similarly, when company bosses have written to employees during the current campaign, such as Paul Kahn of Airbus UK, it has been a newsworthy event. There was nothing newsworthy, in 1975, in company bosses writing to their employees – indeed, as newspaper reports of the time suggest, it was almost expected.

There are other big differences between 2016 and 1975 influencing the way business approached the campaign. In 1975, the backdrop was one of high inflation and rising unemployment. Much of the debate concerned food prices and it was easy for business and for pro-EEC politicians to warn of a threat to jobs outside the EEC. Now (NYSE: DNOW - news) , with record numbers of people in work and unemployment continuing to fall after several years of having done so, the risk of unemployment outside the EU may not carry quite so much of a threat and particularly at a time when every EU country, apart from Germany and the Czech Republic, has a higher jobless rate than Britain.

Perhaps the biggest change of all is that society is no longer as deferential towards the authorities and public figures as it was in 1975. Politicians, business leaders, the police, the media, religious leaders, celebrities and even the medical profession do not command the respect from the public that they did 41 years ago. It may well be that many business leaders, this time around, have concluded their voice simply does not carry as much weight as it once did.