In line with our risk management framework, today we published our Q4 2019 performance update.
The EU referendum debate and us
If you dare open a newspaper these days, it's difficult subject matter to avoid. The referendum on Britain's EU membership, now likely to take place in June this year, has been a source of polarising debate, and this will only intensify on the back of David Cameron’s negotiations for his ‘deal’ with the EU this week.
Unsurprisingly, right-wing media generally advocate for Brexit, and their left-wing counterparts just about favour the vote to stay in. But such dispositions have proved to be an overly simplistic distinction among the public, and even politicians, in order to ascertain who supports what. This isn't Left vs Right, or Tory vs Labour. People from both sides of the political and socio-economic spectrum have their own reasons for voting Stay or Leave, and, when coupled with the significant portion of the masses who are either undecided or apathetic, predicting which way the result will go isn't the foregone conclusion it was once assumed to be.
The argument for Brexit is clearly underpinned by the core issues of immigration, sovereignty and EU bureaucracy. Scaremongering, particularly on immigration, was always likely to be the chief tactic utilised by Eurosceptics. What has been surprising though has been the willingness of the ‘In’ camp to adopt a similar approach; with an almost apocalyptic picture being painted of a post-Brexit Britain through ‘Project Fear’.
Discerning the facts from the hype
Perspective can be hard to come by with all the venom and vitriol flying back and forth, so for a balanced view, it may be worth visiting the website InFacts.org. As the name suggests, it isn't a neutral site, and openly favours a vote to remain. But it does so by focusing purely on facts, and correcting false or misleading arguments from politicians and influencers - on both sides of the debate.
Speaking from the perspective of being a peer-to-peer lending platform, and a relatively new FinTech company, we believe the best way forward for the UK to be a no brainer. Of course, there are arguments to be made for both sides, and we have the utmost respect for the opinion of every individual with a stake in the matter.
But the case for remaining almost makes itself, as the benefits of EU membership simply overwhelm arguments to the contrary. In terms of outgoings, we as the UK send approximately £1 billion to Brussels each month. This seemingly huge sum must immediately be whittled down by the millions our farmers, scientists, regional development projects and similar get back - from the off.
Also, of the large amount Brussels pays in foreign aid, we count a significant portion towards our own targets. So really, the net amount of our 'bill' is less than £500 million a month - identical to what Norway pays for access to the single market; but, unlike us, they don't get a vote on EU rules.
And it is this single market which is so priceless. Exports to the EU alone in 2014 were worth £220bn (44.6%) to our economy, of which a major chunk came in the form of financial services. Imports from the bloc were estimated to be around £280bn (53.2%) too. And some 4 million UK jobs - either directly or indirectly - are linked to this trade with the EU. Brexit obviously won't evaporate them all entirely, but any red tape and extra costs to trading as a result of it would surely impact such a favourable set of numbers.
So-called Europhiles say that households are £3,000 per year better off on average as a result of membership. While InFacts can't precisely corroborate this, given that the fine print of any post-Brexit trade deal is unknown, they believe it to be a sound midpoint estimate.
From an economic view, we are facing numerous external threats such as nosediving global stock markets, dismal growth in developing countries, and a slowing Chinese economy. Is now really the time to be taking the plunge into an opaque unknown that no one from either side could accurately define or quantify? Bear in mind also the strength of London's centrality and prominence with global trade. Why would we want to undermine one of the most appealing aspects of our great capital - access to the single market - by folding this good hand?
The view from Lending Works
As a company, our interest in this debate isn't simply academic. Although we currently only offer our services to British residents, many of these actually reside in Europe - the ease of which could be compromised for them by a Brexit. What's more, a quarter of our highly-skilled team hold continental passports, and placing obstacles in the way of hiring people who fill such an important skills gap would undermine ours and many other companies at a time when we are prospering. We're on a path to exponential growth - which will in turn result in many available jobs for British citizens too!
What's more, we believe Cameron's deal - dismissed as "pretty thin gruel" by sceptics - strikes at least one important chord. For all the efficiency of a single market, his request to increase competitiveness within the EU is a shrewd one. Cutting red tape, and limiting administrative burdens on new businesses like ours (and established ones too) can only be a good thing, and can be the heartbeat of a reformed EU. Yes, companies need to incur a certain amount of regulation. But it shouldn't be at the expense of encouraging them to thrive - as has clearly been the case in recent years.
We won't be taking to the streets to picket or campaign our beliefs, nor will we be aggressively trying to change people's minds. But amid all the media hype, we do hope that voters take the time to dig just a little deeper. After all, this is an important debate that needs to be had, and a vote that we all have the chance to make. And we are not blind to the reasoning behind voting Out. But, all things considered, our hope is that if or when you do head to the ballot box in June, you do so fully informed, and making a decision based on cold, hard facts, rather than the framed reports being flung from the hysterical, agenda driven right-wing press.
- The experts view of the economy in 2016
- UK Budget deficit: Why all the fuss?
- FCA regulation: A game changer for the good
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