Quitting European Union Will Be Damaging For British Exports

The rising clamour in Britain to quit the European Union will ultimately backfire the British exports. This warning has been sounded out by David Godfrey, CEO, UK Export Finance.

Godfrey is the head of the UK's export credit agency and he has fact to argue that sustained association with the European Union is "critical" for British exporters to avoid the risk of being frozen out of the biggest overseas markets. Godfrey, in an interview with The Telegraph, said: "I personally think most business leaders gain an awful lot from being part of the EU. It is critical and important for us to continue there."

The export credit guarantee agency was set up in 1919 to support British foreign trade soon after the First World War. Funded by the Treasury, the agency has more than £20 billion exposure on its balance sheet and helps British companies to stimulate exports by way of letters of credit, payment guarantees and direct loans.

The remarks by Godfrey have come in the backdrop of Prime Minister David Cameron's statements and the soaring popularity of the Euro-sceptic UK Independence Party asking to renegotiate Britain's relationship with the EU. The prime minister even wants tightening of the UK's borders to clamp down on migrant workers from other EU states.

Industry Worried

Another pro-EU voice is that of John Cridland, head of the Confederation of British Industry. He wrote a piece in The Telegraph saying: "As head of the U.K's biggest business group, I am extremely concerned about the current debate on immigration. From my travels up and down the country and overseas, I can say all business leaders share this sense of unease."

Meanwhile, a research report from from University College London noted that in the last decade, since 2001, EU migrants have made a positive net contribution of £2,732 per person per year to the U.K. The Centre for European Reform has estimated that membership in the EU increases Britain's trade in goods by 30 percent. Currently, Europe accounts for 54 percent of Britain's total trade.

Export Finance

In a recent reaction, Jose Manuel Barroso, the outgoing president of the European Commission, also cautioned Britain against quitting EU and end up losing its global influence. The quitting process, referred as "Brexit," will land the U.K. in distress and would find it hard to negotiate with major trading partners such as China and the US on its own account, Boroso said.

Still, business leaders are wary that that a referendum on Britain's membership of the EU, sought by politicos in 2017, may lead the country's exit from the free trade grouping. In another report, Telegraph said more and more British companies tapping new export markets are turning to state-run export promotion agency, UK Export Finance, in achieving the target of doubling the value of exports to £1 trillion by 2020.