Think of a pan-European institution. An institution that stretches across the continent, from Ireland and the UKto Poland and Romania. It invests billions in this continent, and benefits from the euro, free trade, and the free movement of labour. Its hugely respected, and has been around for decades.
We gain a lot from being in the EU
Im thinking not of the European Union, but of Unilever. And there are many others too. Think of Volkswagen or EADS. Would you ever think of breaking Unilever up into the individual countries in whichit does business?
What strikes me about the Europe debate is how narrow it tends to be, and how negative. But savvy investors and the companies in which they hold shares know that by being part of the EU, were connected to the rest of this great continent. They know the EU doesnt make Europe more complicated it actually simplifies it. It links the economies, the currencies and the governments. It also links the companies, the scientists and the stock markets.
Why on earth would you break those links?
One argument for leaving Europe is that its very expensive. We say it costs us around 0.5% of our GDP. I work in research,helping academics bringscience fundingto my university. Much of our funding actually comes from the EU. If we were to leave the EU, the universities would find that their research funding would fall away dramatically, and many valuable research networks would be broken up. We may pay a lot into Europe, but we get a lot in return.
Leaving would be sodisruptive
Another argument is the euro. And Europe certainly has been struggling in recent years with the crisis in Greece. I still feel Greece would be better off outside the eurozone. But investors buying shares in European companies, firms doing business in the EU, and holidaymakers know how much trouble a single currency saves them. Whether youre a bank, a consumer goods company or a retailer, the euro makes life much easier.
But the euro-separatists have an ace up their sleeve: what about immigration? Yes, certainly theres a lot of migration into the UK arguably too much. But I think Britains job creation machine is actually benefitting because of immigration, and despite the huge influx, the employment rate in this country is the highest since records began.
We would be plunging into the unknown if we left Europe, and such a move would be incredibly disruptive. Now if things were going badly, disruption might actuallybe a good thing. But after eight long years,Britain is finally booming again. I baulk at the thought of what might happen to the FTSE 100 and the pound if we left, as do many business leaders. I see no point in disrupting things now.
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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.