IAIN DUNCAN SMITH: The Nazis, Maggie, the euro… our business bosses always get it wrong

There is a tendency among the political classes to pretend that big business has a monopoly on economic wisdom about our country’s future.

As a result, the public is urged to accept, without challenge, the views of corporations and their representative bodies such as the Confederation of British Industry (CBI).

According to this fashionable narrative, the insights of corporate chief executives should count for much more than the decisions of voters exercised through the democratic ballot box.

The belief in the primacy of corporate opinion has been on full display in recent days. The pro-EU establishment, along with large sections of the media, has given prominent coverage to warnings by those two global giants, the aeronautical manufacturer Airbus and the car manufacturer BMW, that they might leave Britain after Brexit if the negotiations on a trade deal do not proceed to their liking, especially on customs alignment.

The CBI called for a a ‘bare-knuckle’ confrontation with Margaret Thatcher over trade union reforms and went on to bully the government into joining the European Exchange Rate Mechanism

This is Project Fear with a vengeance, a renewed attempt to scare the British people into embracing an emasculated version of Brexit, complete with the continued supremacy of the EU courts and single market regulations.

The same bleak propaganda has been pumped out by the same people for more than two years, yet the forecasts of disaster have never materialised.

We were told by big business that a vote for Brexit would lead to an immediate recession and soaring unemployment. Nothing of the sort happened.

Economic growth has continued, while the jobless rate is at its lowest since 1975.

In the same vein, I remember the mighty engineering firm Siemens predicting — just like Airbus and BMW — that it might be forced to cease investment in Britain in the event of Brexit. But what actually occurred? Since the vote, Siemens has continued to pump millions into this country, including the recent announcement of a £27 million 3D printing factory in Worcester.

One fundamental problem in attaching too much credence to the utterances of big businesses is that such firms, while vital to the economy, are hardly representative of the whole private sector.

We hear a lot about the importance of the global giants, but the vast majority of businesses in the UK employ fewer than ten people, while small and medium-sized enterprises account for 51 per cent of all turnover in the private sector.

In the real world, beyond media spin and politicised briefings, trade with EU is not always as dominant as the public might think. Most of our economy is domestically oriented. Indeed, just 8 per cent of our manufacturing companies export to the EU, accounting for only 12 per cent of our entire Gross Domestic Product.

Simon Boyd, the Chief Executive of Reid Steel, a leading steel construction company, put it well when he said: ‘Big businesses and multi-nationals attract all the attention but they do not reflect the view of businesses like mine.’

He further points out that, far from helping enterprise as the pro-EU lobby argues, Brussels rule has ‘held us back’ through its stream of directives. ‘To prosper and increase our productivity we must be free to trade with the rest of the world, which is where all the growth is,’ he says.

The second essential point to remember when big business intervenes politically is that over decades they have, with amazing consistency, been wrong.

Federation of British Industries – the forerunner of the CBI – oversaw the creation of 33 separate agreements between British and German business groups while the Nazis were opening their concentration camps

Before World War II, as the historian Andrew Roberts has pointed out, the Federation of British Industries — the forerunner of the CBI — supported both the Gold Standard (which, in its constraints on a government’s ability to manage the economy is an instrument of jobs destruction), and the appeasement of Nazi Germany.

Between 1937 and 1939 while the Nazis were opening their concentration camps, the FBI oversaw the creation of no fewer than 33 separate agreements between British and German business groups.

Undaunted by this sorry record, after the war the CBI supported the socialistic nationalisation of much of the economy by the Labour Government — just as it backed Harold Wilson’s ill-fated introduction of tripartite state planning (social partnership based on affiliations between business, labour and the state to create economic policy) in the 1960s, and the wholesale surrender to trade union power in the 1970s.

It might have been thought that the CBI would at least have welcomed the pro-entrepreneurial spirit of Margaret Thatcher from 1979. Not a bit of it. The big business lobbyists slavishly followed the conventional, soggy, anti-Thatcherite establishment consensus.

In 1980, the CBI Director General Sir Terence Beckett even called for a ‘bare-knuckle’ confrontation with Mrs Thatcher over trade union reforms. And it was towards the end of her time in office that big business took up the new cause of British membership of the European Exchange Rate Mechanism (ERM), eventually bullying the Government into agreement.

As we all remember, that move proved a catastrophe, plunging the country into recession and forcing interest rates up to 15 per cent in 1992 as the Treasury desperately tried to maintain the artificial value of sterling. The recovery began the very moment Britain left the ERM.

Having learnt no lessons from recent history, the CBI then campaigned for Britain to join the single currency.

The euro, the organisation argued, would ‘deliver significant benefits to the UK economy’. Then, as now, we were lectured by a succession of business leaders who darkly predicted we faced economic Armageddon if we failed to sign up for the Eurozone. Imagine if we had actually followed such advice. Unable to adjust the exchange rate, the British economy would have crashed and burned — just as it did in Spain and Italy.

Instead, we have incredible figures for both job creation and business start-ups which are the envy of Europe.

The CBI argued that the euro would ‘deliver significant benefits to the UK economy’ but if we had followed that advice the British economy would have crashed and burned

Yet the worry is, despite the CBI’s appalling track record, when it comes to Brexit, aggressive corporate campaigning could have a pivotal impact on Government policy by forcing Britain to remain, in effect, under EU rules.

There are already signs that this is happening, with key figures in the Cabinet now acting as cheerleaders for the argument — made by BMW and Airbus — that Britain must remain as closely aligned to the Single Market and Customs Union as possible.

But such an approach would be disastrous on two grounds. First, it is not what the British people voted for in the referendum two years ago this month.

The electorate backed Brexit precisely because they wanted real independence, taking back control of our borders, trade, economy, laws and justice system.

Second, whatever the corporate lobbyists say, a meaningless half-in half-out Brexit would be terrible for the spirit of enterprise in Britain. It would shackle initiative and mean that Britain would remain a rule taker rather than a rule maker.

From the world-beating Dyson company to small start-ups, businesses want to break free from the cloying and costly effect of European regulations.

Just as importantly, EU domination would stop Britain from making its own trade deals with rest of the world. That would mean locking ourselves out of 90 per cent of the global growth that will occur outside the EU over the next 15 years. That is the price we will pay if the anti-Brexit business lobby is allowed to win.

Finally, a word of advice to the Government: its job is to listen to the people who voted by the largest number ever to take back control of their country from Europe and not to the self-serving careerists looking over their shoulders to Brussels.

n Iain Duncan Smith is MP for Chingford and Woodford Green.


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