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What the Treasury's analysis of EU membership says about small businesses

What the Treasury's analysis of EU membership says about small businesses
Enterprise Nation
Enterprise Nation
Enterprise Nation
 

Posted: Wed 20th Apr 2016

The Treasury this week released a 200 page document analysing what it said will be  the long-term economic impact on the UK of EU membership  and the alternatives. We've looked through the document and pulled out the sections of interest to small companies.

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Regulation

"EU membership means accepting the regulatory framework associated with it, and in particular the rules that enable UK firms and consumers to access the Single Market. These rules are necessary for its functioning and reduce barriers to trade. Properly designed rules bring important benefits for businesses and reduce costs for consumers. The UK has made improving this regulatory framework, especially for small business, a long-standing priority, including in the UK's recent renegotiation. Not least because of the UK's influence, the flow of new EU regulation has reduced in recent years."

"The UK government has made minimising the impact of regulation, whether EU or UK, a consistent priority, particularly for small and medium-sized enterprises (SMEs). This was reflected in the government's renegotiation strategy ahead of the agreement of the UK's new settlement with the EU."

"Under the UK's new settlement, the Commission has agreed for the first time to work toward setting specific targets to reduce the overall burden on business in key sectors. This will include EU specific targets in the 'most onerous areas' for businesses. The Commission will, in particular, focus on cutting costs for small businesses across the board; and the European Council Declaration on Competitiveness commits to "doing more to reduce the overall burden of EU regulation, especially on SMEs and micro enterprises". The Commission will report to the European Council on an annual basis on progress against the targets, once they have been established."

Innovation

"The UK is home to operations of all of the top 20 global pharmaceutical companies, as well as many smaller ones, including a flourishing bioscience industry and innovative startups. The UK has 80 different companies involved in one or more stage of pharmaceutical manufacturing. These companies operate on 91 different sites and are involved in one or more of the stages in producing 216 products authorised across the EU market. Exports of pharmaceuticals are significant with over half going to the EU, worth £29m each day. The Single Market will give life science companies investing in the UK access to new  opportunities in a wider market for their products. These benefits for UK-based companies  would be put at risk if the UK was to leave the EU. The EU provides a single framework  for regulating and improving pharmaceutical products. This ensures a high standard of  patient safety, raises productivity through economies of scale and increased competition,  and reduces the cost of supplying drugs across the EU."

Funding

"The European Commission's Capital Markets Union action plan published in September 2015 sets out a range of proposals, both legislative and non-legislative, to be developed and pursued over the next 4 years. This includes proposals to: revive securitisation and help banks lend to the real economy; reform the regulation on prospectus requirements to allow smaller firms to better access public markets; and review venture capital funds legislation to encourage more investment into venture capital across Europe and improve the range of options for investors."

Exports

"Some businesses would be disproportionately impacted by being outside the customs union. For example, small UK firms in particular are likely to find it difficult to navigate these complex rules and procedures, raising the barriers for small firms to use exporting as a route to growth, jobs and productivity."

Jobs

"The UK has a particularly strong record for job creation in SMEs which account for 60% of all private sector employment. Furthermore, the nature of work has also changed significantly. Since 2010, 86% of the increase in employment has been from high or medium skilled occupations, particularly in the service sector. Over time, this should support a rebalancing of the overall skill mix of the workforce towards higher skilled jobs, leading to an increase in overall labour productivity. Leaving the EU could affect the progress the UK is making to rebalance the workforce in favour of higher quality jobs, potentially undermining the competitiveness and productivity of the UK's workforce in the long run. Some regions and sectors could be more heavily affected by this than others."

You can read the Treasury's full document here.

What are your views on the EU referendum? Tell us in our survey.

 
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