JCB boss says EU exit could lift burden of bureaucracy on UK businesses

The top executives of JCB, one of the UK’s biggest manufacturing companies, have said Britain should vote to leave the European Union if David Cameron fails to negotiate reductions to bureaucracy that weighs down UK businesses.

Graeme MacDonald, who runs JCB for its billionaire owners, the Bamford family, said the EU was an important market for JCB, but he dismissed concerns about the impact on business if Britain voted to leave the single market.

Asked if it would be better for the UK to quit an unreformed EU, he said: “I think it would be, because I really don’t think it would make a blind bit of difference to trade with Europe. There has been far too much scaremongering about things like jobs. I don’t think it’s in anyone’s interest to stop trade. I don’t think we or Brussels will put up trade barriers.”

Meanwhile, chairman Lord Bamford told the BBC that the UK “could negotiate as our own country rather than being one of 28 nations in Brussels as we are today”.

JCB, the world’s third biggest maker of construction equipment, has strong links to the Conservatives. Lord Bamford has given £2.6m to the party in the past five years and was made a Tory peer in 2013. Bamford has been vociferous in calling for the government to promote UK manufacturers. He produced a report for Cameron in 2012 calling for a German-style long-term strategy to support manufacturing and exports.

MacDonald said Britain was too important an export market for the EU to make drastic changes to trading conditions. For example, the UK is the fourth-biggest market for German cars, he said. JCB is building a new £18m headquarters in Germany.

“What is needed is a lot less red tape and bureaucracy. Some of it is costly for us and quite frankly ridiculous. Whether that means renegotiating or exiting, I don’t think it can carry on as it is. It’s a burden on our business and it’s easier selling to North America than to Europe sometimes.” He said reducing red tape for business was Cameron’s most important task when seeking concessions from other EU leaders.

JCB’s view is at odds with the views of other UK business leaders such as Sir Martin Sorrell, the chief executive of WPP, the world’s biggest advertising company, and Sir Michael Rake, BT’s chairman. They have echoed Tony Blair’s warning during the election campaign that Britain would suffer damaging instability before the referendum and after a vote to leave the EU.

Cameron has promised to hold an in-out referendum by 2017 after seeking to renegotiate how the EU operates. His demands include an opt-out for Britain from the goal of an “ever closer union” and greater powers for national parliaments to block EU legislation. Cameron’s team is understood to be drawing up plans to bring the referendum forward to next year to avoid a clash with French and German elections in 2017.

Amid growing talk of a possible “Brexit” in the wake of the election, MacDonald’s comments are likely to be seized upon by Eurosceptic MPs such as Peter Bone and David Davis, already encouraged by Cameron’s referendum promise.

Many businesses are also keen for EU reform. A recent survey by the IoD, the business organisation representing a range of large and medium-sized companies across the UK, found 60% of their members said staying in the EU depended on successful reform in key areas, notably employment regulations.

However Lucy Thomas, campaign director for Business for New Europe, which supports the UK staying in a reformed EU, said MacDonald was right to call for a reduction in EU bureaucracy but said a Brexit would damage Britain: if it left the EU it would have no say in the rules and would still have to accept them.

“Of course JCB and others could still sell their goods to Europe, but they would still have to meet EU standards whatever they happened to be. Surely a seat at the table when rules are decided is better than no say at all?

She added: “There is also no guarantee of what ‘out’ would look like: British businesses could potentially see tariffs and other barriers imposed on their goods and services, making them far less competitive.

“We also benefit from free trade deals with over 50 countries all over the world and outside the EU we would lose all of those. Renegotiating would take years and why would global powers listen to the UK with 65 million consumers more than the EU as a bloc with 500 million?”

“Companies who say they would reconsider their presence in the UK really mean it. They will go wherever makes business sense and if the UK is no longer competitive, they will not stay.”

The prospect of the UK leaving the EU was cited by banking group HSBC as one reason why it was considering moving its headquarters from London to the Far East.

HSBC chairman Douglas Flint said at last month’s annual meeting: “In February we published a major research study which concluded that working to complete the single market in services and reforming the EU to make it more competitive were far less risky than going it alone, given the importance of EU markets to British trade.”

The JCB chief executive was speaking as the firm revealed that it had made a profit of £303m last year, down from £313m in the previous year. Sales fell from £2.7bn to £2.5bn. JCB’s UK business had been boosted by increased housebuilding and big infrastructure projects such as the Crossrail transport link in London. “Our customers see this going on for another two years or more,” he said.MacDonald also called on the Conservative government to make quicker decisions on big building projects now that it no longer needed to do deals with the Liberal Democrats.

“With the coalition there was always an element of compromise. We’ve been discussing for a long time HS2 or whether we should have an extra runway at Heathrow. The government needs to get on with it. We look at other economies around the world and they have built new airports while we’ve been deciding whether to build a runway or not.”