Major attack on Euro ‘enemies’ will hit British businesses hard

Predictably and lazily enough, a number of our political commentators compared last week’s assault on the European Union by the Prime Minister with Neville Chamberlain’s declaration of war.

That Major is being presented as a patriot and defender of the realm, in the class of war leaders, is a nifty, if cynical, piece of product marketing by his supporters. But it may be that this episode finally reveals to the British public that there is less to Major than meets the eye – like flashly-packaged sweets that are a disappointment both in quality and quantity when opened.

But that is a political point. What we need to examine is the effect on British business of Major’s fit of pique. There appears to be no doubt anywhere in the European press – including the British press – as to Major’s motives. He wants to appease howling Europhobes such as Michael Portillo, by defending the continental European markets on behalf of British traders in gelatine, tallow and bovine semen.

These are not fast-moving consumer goods. But, we must admit, the British beef industry is important to our balance of payments and we should not discriminate against marketers of bull semen just because their product is low-profile in consumer terms. The beef industry is a multi-billion pound one, and we would all be the poorer for its demise, not to mention the political consequences for a Government unable to provide pre-election tax cuts as a result of its collapse.

But we should look beyond the beef derivatives market to see what effect Major’s “Churchillian” stand against our European “enemies” will have on British business, which is now so international in its aspirations that a significant tranche of it now employs more staff in continental Europe than it does here.

Hitherto, British business’ political concerns on the continent have been the prospect of a Labour government that would adopt a social contract and inflict a minimum wage. In one effortless lunge, Major appears to have exposed British industry to the greater threat of having to operate its European business operations from outside the European Union.

Furthermore, large American and Japanese manufacturers and suppliers to the car and technological industries have located plants in Britain precisely because it is part of the European economic infrastructure. They are unlikely to take kindly to the prospect of now having to operate outside of it – witness the slide in the value of the pound after the launch of the European offensive.

There will be numerous examples at an operational level of British industries that will look dolefully at Major’s “brave stand”. Let me cite just two that will suffer from the proposal for European non-co-operation.

Financial services have developed, over a decade or more, through corporate consolidation and technological advancement. Britain has not always been in the vanguard of this movement, but some companies – the clearing banks excepted – have been innovative. One thinks of Royal Bank of Scotland’s development of Direct Line insurance services and Virgin’s entry into the market.

The European Commission last week issued a Green Paper declaring considerable progress had been made in liberalising cross-border selling of financial services, but member states had been slow to implement them and, consequently, financial services groups are not selling internationally as effectively as they could.

In other words, there is a prime European market opportunity in financial services that is currently being squandered. Those who are swift to recognise the opportunity will steal a march on their rivals and, if their services are effective and well-priced, they will clean up. I wonder though how British financial services companies will be able to seize this opportunity when, every time there is an opportunity for their interests to be represented in Brussels or Strasbourg, the British delegate speaks instead of beef.

In the technological field, Compaq – the world’s largest personal computer manufacturer – has teamed up with the French state-owned Thomson Electronics conglomerate to develop home-entertainment products. British supply technology is second to none in the so-called Silicon Fen of Cambridgeshire, but it is unlikely to get to the negotiating table if Major pursues his isolationist policy to its obvious conclusions.

Major’s speech last week to the Confederation of British Industry was greeted with muted and grudging applause. Little wonder. A couple of days later, the CBI’s incoming president and British Airways chairman, Sir Colin Marshall – a man who knows a thing or two about international markets – made it clear that withdrawal from the EU would be very unwise indeed. Business people know that to be true.

But the Government’s Little Englanders think they know better. I had dinner a month ago with a prominent government minister and Europhile. He shrugged at the treatment Britain had received from Europe over the BSE crisis and said: “What do you expect when we have treated our European partners so badly over the years? There is simply no goodwill in the bank.”

The minister talked of Eurosceptics as though they were in a different party. As far as British business interests are concerned, they might as well be on a different planet.