It’s been described as one of the most important questions that will face this generation: do you vote stay or do you vote go?
Brexit – or, if you prefer the longhand version, Great Britain and Northern Ireland leaving the European Union – has turned something that many thought was unimaginably dull (European matters) into something pulsating and vital. Never a day goes by without a screaming headline about billions we face losing through missed opportunities, the billions we could save; the protracted trade deal negotiations, or the sweet deals we could make for ourselves on the other side. It’s a debate that has split the entire nation with those who support it accused of being eccentrics and racists, and those who oppose it, scaremongers.
The problem is for Boris et al, the pool from the business world of supporters is as shallow as a puddle. It appears, at least for British business, the smart vote says stay. Those opposing Brexit include Bob Dudley, CEO at BP, Ben van Beurden CEO at Royal Dutch Shell, HSBC’s Douglas Flint, National Grid Utilities’ Steve Holliday and Ian Taylor CEO at Vitol Energy, as well as about 200 other ‘Who’s who’ industry leaders, who signed a letter urging Brits to vote to stay. There is a smaller pro-Brexit lobby led by the likes of the millionaire Labour donor John Mills, Nigel Wilson from Legal & General and Jim O’Neill, former chairman of Goldman Sachs who said back in 2013 we “shouldn’t be scared of leaving it, and exploring a world without it.”
Except that’s not how to run a stable, supportive economy. Like children, business mainly hungers nurture and support with the dose of adventure on the side. O’Neill has since clarified his remarks shouldn’t be taken as a pro-Brexit stance, as he uttered them before the possibility of a referendum was even mooted.
Back to our neck of the woods though, and the view from Bob Dudley is that, “There are lots of technical tax reasons, trade flows, regulation, that would make it better for our business and the energy business in general, the oil and gas business, [if Britain] were a part of Europe.” The BBC quotes him warning that being outside would be “worse” as many of the rules would still apply and Britain would be in danger of losing its influence on the world stage. In other words – if you’re not at the table, you’re on the menu. This was recently underlined by a group of German lawmakers who firmly declared, “Out means out!” the week after President Obama said the UK would go to the back of the queue when it came to deals on trades.
More disconcerting yet is the final pronouncement when asked if Brexit would put BP off investing in the UK: “I think uncertainty always changes what businesses do. And if certain event unfolded that made it more uncertain on the future of those investments and the viability then we would have to look at it carefully.” This could impact on not only shale gas drilling in the UK but also plans to build renewable energy plants. “You could imagine the UK would work rapidly on free trade agreements with the EU but that would take some time, “ said Dario Traum from Bloombery New Energy Finance. “Over that period of uncertainty you would probably see big investors holding back until they know for sure what environment they would be operating in.”
As anyone who has spent a day working in our industry knows, the free travel for people between the EU/UK is essential and there is no indication what impact Brexit would have on this. Van Beurden, speaking to The Sunday Times, addressed this very point of borders and barriers. “Companies like ours thrive by there being no barriers. That is a fundamental aspect of it.” We may potentially be looking at increased bureaucracy, increased costs for employers at a time when most are cutting them, favouritism for EU workers over ‘nons’ which would confine UK workers to the North Sea or much further abroad as the slack is picked up by Australia and Nigeria, even India. PWc adds weight to this argument by pointing out many companies have European HQs such as EDF Energy, ScottishPower and RWE npower which could be affected by restrictions on the movement of their people. In addition with the skills shortage we’ve reported on in the past, many vacancies are filled with workers from outside the UK. Would that continue to be a viable option?
Furthermore, as rocksolve.com points out leaving the EU would cut off a major resource to science funding which it says is “below the European average” in the UK. Financial pipelines such as Horizon 2020 enable the UK to “punch above its weight” resulting in it taking on projects of a scale and complexity matching ones in the US and China.
If you’re been following this only on the periphery you may only recall the Vote Leave camp highlights an opportunity to cut down on European red tape but there are other potential benefits. Rigzone.com spoke to Cary Larry, director of oil and gas business development at Frost & Sullivan. He believes it could strengthen GB. “If [Great Britain] can have a (successful) economy, if they can show some kind of strength – it would help their investment opportunities in the North Sea,” he said. “We could see, from a production standpoint, something good come from it.”
Yet in arguing that we need to show some form of strength it suggests we’d start from a weak position. Therein lies the issue with Brexit. Is it wise to do yourself harm in the hope of rising like a phoenix? When there are so many unknowns hanging in the air – effect on jobs, on companies, on economies – is it worth the risk? We’ll find out on June 24th. Just remember to vote the day before!