UK veto in Europe – how will it affect the HR community?

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It is clear that some other members of the EU, especially those within the Eurozone are irritated at the UK veto.

For them it is an opportunity for political point scoring and to set the UK up for taking some blame for anything that goes wrong should the Eurozone unravel any more.

But I think Prime minister David Cameron was correct in his decision and it is already being vindicated.

Even Germany has now come out and stated the importance of the UK to Europe. In truth, the value of the agreement on 9 December is very low. It could be years before it is ratified. So Cameron in effect said no to an agreement that will hardly benefit anyone anyway.

Last week's agreement does not come close to solving the Eurozone crisis and when that is fixed the agreement will be largely redundant anyway - other urgent economic measures will be more pressing such as bank liquidity and growth.

But what of the impact on the UK and UK employers?

This has been massively overplayed in the media; our influence in Europe will hardly change and when Sarkozy goes in 2012 we will be able to re-build a more balanced relationship with France. Merkel will also most likely be gone by late 2013; I believe she has been a weak leader in this crisis.

The UK still has extensive legal rights with the EU and these will not change. Nothing changes in the functional and technical manner of our EU membership and beyond the political posturing there remains even within the army of bureaucrats a pragmatic approach to members.

Employment laws will remain the same and even the system of recourse to Europe will remain the same. Only a further, dramatic re-negotiation of our terms of membership could change these things. In a two-speeded EU this is possible, but not probable.

The mobility of workers remains the same but I think that the UK will recover economically a little faster than the Eurozone now - even with Germany at its heart.

The UK will therefore be more attractive to overseas skilled and unskilled labour - this should be a valuable opportunity.

Unemployment has of course just risen in the UK but given the lag effect of the credit crisis and the impact of taxation and public sector layoffs this was of little surprise. The UK veto will not affect the UK's competitive currency value and this will help drive exports, growth and employment in the second half of 2012. A Eurozone economic disaster would change this adversely.

Inward investment should be a bi-product of the EU Veto. To the international manufacturing community the UK now looks like an even better location to be based in Europe. Wage costs are under control and we are more immune to the contagion effects of the Eurozone debt crisis than the other large EU economies.

As far as existing trade relationships are concerned we will see the pragmatism of business come through. Business has little interest in the bloated and ponderous machinations of the EU. Trade will continue, wealth will continue to be sought after. Yes, some trading will be impacted by EU austerity programmes but new opportunities will also emerge as the commercial dynamics of the EU countries change.

The financial regulations that will come into play will be looked at even more closely by the UK and their enforcement watched with greater interest - i.e. the implementation is going to have to be very clean and fair.

There are pragmatic, economic, political and commercial aspects of the UK veto. Currently the focus is on the political. We will soon move into the commercial considerations, here we will be quite well placed.

Doubtless the other 10 non-Eurozone members are looking on with interest and with some tacit support for the UK. It will be interesting to see how this plays out, but the Eurozone club is now firmly not in the 'greener grass' category.

Stephen Archer (pictured), business analyst and director of Spring Partnerships

 

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