By Marcus Leach

Simon Walker, Director General of the Institute of Directors, this morning (Wednesday) welcomed a packed out Royal Albert Hall for the Institute's 2013 Annual Conference.

Mr Walker, like many in recent weeks, acknowledged that the economy was improving, but again, as many had, reminded the audience that uncertainties remained.

"The indications are that an economic recovery is underway, but uncertainties remain," he said.

"Businesses face any number of daily challenges. Access to finance. Employment law. Regulatory burdens. Changing conditions. Staffing issues. Overheads.

"Businesses have to make decisions for the long term despite the unknowns and the uncertainties that can disrupt our plans, or make it difficult to plan at all."

However, it was one issue above all else that he focused on, that being Britain's membership in the European Union.

"There is one issue which has, perhaps more than any other, dragged uncertainty behind it for too long. An issue that ignites passion on every side and divides politicians as well as the business community," Mr Walker said.

"I’m referring to Britain’s membership of the European Union.

"In this hall there will be a broad range of views on EU membership, reflecting the country at large. For some, the free movement of goods and people within a single market is a triumph of our time.

"For others, the regulatory and financial burdens of membership raise questions about how well the system works - and for whom it is working.
There will also be many people who view the issue as a simple question of sovereignty.

"The financial crisis, combined with some very real concerns about the politics of Europe, has presented this country with an opportunity to examine the foundations of our EU membership. The IoD would be failing its members if we didn’t engage in the debate around Britain’s future relations with the EU.
So we’ve asked them.

"In a recent survey of IoD members, four fifths of you said your business has some link with the EU. Drilling down: just 15 per cent of IoD members would vote for a full withdrawal.

"Of course, it is not just an in-out question. The Prime Minister has made clear his commitment to renegotiating the terms of British membership and to offering a new settlement to the British people in a referendum.

"Our research shows that 60 per cent of IoD members support a renegotiation.

"At the moment if a referendum were held, half of you would vote to keep British membership. However — showing the pragmatism for which so many in business are known, a third reserve judgement - saying it would depend on the renegotiation.

"Britain is still a nation of influence and standing. Our seats at the top tables of the world have been hard won and should not vacated lightly.

"European immigration brings huge value and is vital to our economy. But in too many areas, Europe has lost its way. Its regulatory and legislative output ties up the efforts of small and medium sized businesses. Efforts which could otherwise be spent on innovation, expansion and investment.

"IoD members value the single market, but there’s much less enthusiasm for EU intervention in corporate governance, employment law and home affairs.

"A new, more relevant relationship with the EU is not incompatible with our role as an outward looking country. But to those who call for a British withdrawal, I’d urge caution.

"Amongst IoD members and across the business community there is very little appetite for such a policy.

"As business leaders I believe we must make the case for a reformed, more equitable relationship - but one that still has Britain at the heart of European influence.

"It is possible to reform our relationship with Europe. Recent successes for Britain in financial services show this.

"A concerted effort to head off the proposed Financial Transaction Tax has worked, with EU lawyers conceding the policy would infringe upon the taxing powers of member states.

"Brussels has backed off its plan to take over the regulation of Libor. Just last week the European advocate-general agreed with Britain that the European Securities and Markets Authority should be stripped of its power to ban short-selling.

"Other countries are now questioning the extent of Brussels’ powers. If Chancellor Merkel is re-elected this weekend a new coalition of the willing could be possible — reshaping the EU, driving economic competitiveness and completing the single market. Reform is possible - if the political will exists.

"Advocating a genuine single market should an urgent priority. It’s a scandal that 20 years after it was supposed to be completed, there is nothing close to a single market for services across Europe.

"Regulations requiring a service provider to be a national of the country or resident in the country, still exist.

"Architects and structural engineers wanting to work in Germany will find no single market access. Nor is a lawyer or patent agent able to work freely in Poland.

"In modern Europe, national barriers to trade still exist. A recent Europe-wide poll found that these barriers in the service economy mean just 8 per cent of European SMEs engage in cross-border activity.

"Given that 99 per cent of all EU businesses are small to medium-sized enterprises, accounting for the vast majority of all European jobs, creating a single market for the services market and for the digital economy must be a priority.

"The IoD supports the Prime Minister’s planned renegotiation. We’ll make our voice heard in the debate about how that reform should look.

"We can start that conversation today, as I’m joined on stage by leading politicians and opinion formers.

"I shall try to ask the questions that matter to our members. I hope what we hear and discuss will move us all closer to the IoD’s core objectives: better directors, better businesses and a better economy."

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