Business World

Monday 16 December 2019

Tullow boss Heavey backs Cameron's push on Europe

Aidan Heavey
Aidan Heavey

Nick Webb

Tullow Oil's phenomenally wealthy boss Aidan Heavey is backing British Prime Minister David Cameron's move to take power back from Europe and hold a referendum on the UK's continuing presence in the EU.

Mr Heavey, a former Aer Lingus accountant who built Tullow Oil into the biggest independent oil firm in Africa, is one of 48 industry chiefs in the UK who signed a public letter endorsing Mr Cameron's promise to renegotiate the role of Europe and to hold an "in or out" referendum on Britain's membership.

The 48 industry chiefs includes Diageo boss Paul Walsh, Ocado chairman Sir Stewart Rose, Xstrata's Mick Davis and ICAP's Michael Spencer.

"Business faces ever more burdens from Brussels and the single market in Europe has not yet been fully realised. This is the moment to push for a more flexible, competitive EU that would bring jobs growth for all states," Mr Heavey and his peers noted. "Now is the time to reform the EU from within."

Mr Heavey, now based in the UK, is a donor to David Cameron's Conservative Party.

Last week British business secretary Vince Cable warned that Irish trade would be threatened if the UK exited the EU. The "nightmare scenario" of a British exit would see a "green wall" trade barrier across Ireland.

Mr Cable added that it would be "completely wrong" to believe that a British exit from the EU would benefit the Irish economy. "I think the exact opposite," he added. Mr Cable warned that the weekly trade of €1bn between Ireland and the UK rests on the "assumption of a single market".

The IDA has indicated that a British exit from the EU would see Ireland benefit from increased foreign investment as we'd be the only English speakers in the EU.

Mr Cameron's pledge to hold a referendum on Britain leaving the EU may damage investment and jeopardise an economy facing an unprecedented triple-dip recession, other executives and economists said.

'A "nightmare scenario"of a British exit would see a "green wall" trade barrier across Ireland'

Mr Cameron, who announced the plan for a vote by the end of 2017 in a speech in London last week, defended his move at the World Economic Forum in Davos, Switzerland, saying it won't undermine the country's appeal for global investors.

"The prospect of an EU in-out referendum will have a chilling effect on investment in the UK," Adam Posen, a former Bank of England policymaker, said from Davos.

"If people thought Greek risk hung uncertainty on the euro area or the fiscal cliff risk clouded the US investment climate, this will be every bit as bad for the UK. To stretch it out until 2017 is madness."

Mr Cameron said that, if he wins the 2015 general election, he'll seek to renegotiate membership of the EU before putting it to a popular vote. The move, which was criticised by Germany, France, the US and Mr Cameron's Liberal Democrat deputy, Nick Clegg, marks an attempt to solve a three-decade predicament that has haunted Conservative Party leaders.

Confidence in the UK economy is being damaged by a fiscal squeeze that's denting demand at home while exports are suffering from the crisis in the euro area, Britain's main trading partner. The fragile recovery is also under question as the contraction in the fourth quarter of 2012 could pave the way for its first ever triple-dip recession.

Data yesterday showed that gross domestic product dropped 0.3 per cent in the quarter from the three months through September, according to the Office for National Statistics. That compares with the median of 38 estimates in a Bloomberg News survey for a decline of 0.1 per cent.

The prospect of a referendum is adding to an already difficult business climate, according to Martin Sorrell, chief executive officer of London-based WPP Plc, the world's largest advertising and marketing company.

"It can't be positive," Mr Sorrell told a panel in Davos. Mr Cameron "just added another reason why people are going to postpone investment decisions and the last thing we need is people postponing them. There's a lot of uncertainty".

About three million UK jobs rely on trade with other EU countries, according to British government estimates. Mr Cameron said yesterday the UK remains attractive to investors.

"The arguments for investing in the UK are the same, we're part of that single market, we have very low tax rates, we have a very competitive labour force, we have all sorts of excellent things like our brilliant universities, the English language and the time zone that is so central to the world," Mr Cameron said.

"On top of that, we have a plan for making Europe more competitive, open and flexible and securing Britain's place within it."

Half of Britain's exports go to the EU, and 38 per cent of services exports went to the bloc in the first three quarters of last year, according to Citigroup Inc. Exports account for 15 per cent of UK GDP while the rest of the EU relies on trade with Britain for just 2.5 per cent of GDP.

"The uncertainty is likely to make it harder to attract inward investment," Barclays Research said in a briefing note.

While it's "healthy" for the UK to debate its EU membership, an exit from the bloc would be "detrimental", Goldman Sachs Group Inc CEO Lloyd C Blankfein said. (Additional reporting by Bloomberg)

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