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EU not paying UK firms to outsource

by Jack Schickler | 21.06.2016

A series of claims ironically entitled “how good the EU has been for British jobs” has popped up on numerous comment boards and social networking sites, purporting to show that the EU has repeatedly paid companies to leave the UK.

The statements, made by various sources in similar terms along these lines, are not true, according to three companies on the online list contacted by InFacts. Dyson, Jaguar Land Rover (JLR) and Marks & Spencer all denied they had received EU funding in the way suggested.

A related claim by Pro-Brexit Euro-MP Daniel Hannan that “the EU gave Ford a grant to relocate from Southampton to Turkey” is tendentious. In 2012 Ford did receive a loan from the European Investment Bank (EIB), an EU institution, of around £150 million for a factory in Turkey. The loan was not to relocate, as Hannan says, though it occurred around the same time as Ford chose to close its factory in Southampton.

As such, the loan stirred controversy in local newspapers. But it should be put in context of EIB lending in Britain, which was worth around £6 billion last year. EIB loans fund projects like Crossrail and the Midlands Metropolitan Hospital in Birmingham. Notably, the bank lent Ford £450 million in 2010 to develop a new generation of greener vehicles in the UK.

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That is on top of the £13 billion in EU structural and investment funds that we are due to receive over the current 7-year budget period. In addition, we are the second-largest recipient of EU research funds, which benefit companies like Ford, Marks & Spencer and JLR.

In addition, rather than the EU shooing companies away from the UK, our membership of the single market wins us vast sums in investment, both from businesses headquartered on the continent and international firms that want to use the UK as a springboard to access the bloc. Brexit would destroy thousands of jobs that this investment creates.

The Institute for Fiscal Studies notes foreign direct investment to the UK is worth an average £54 billion per year. It reckons Brexit would reduce this sum by between 10% and 45%.

Investment cuts seem likely to affect car makers like JLR. In 2013, 77% of the vehicles made in the UK were exported, of which half went to the EU. If auto makers faced tariffs or non-tariff barriers to reach European markets, they might not be based here at all. Indeed, the CEO of JLR is among those calling for Britain to stay in the EU, warning that leaving would deter investment and threaten jobs, while on Monday Ford wrote to its UK workforce explaining why it “believe[s] that the UK should remain at the heart of a reformed EU”.

Ex-Microsoft boss Bill Gates, who has ploughed $1 billion into research facilities near Cambridge, has sounded a similar warning. He told the Times that “outside of Europe, [Britain] will be a significantly less attractive place to do business”. Hitachi Chairman Hiroaki Nakanishi told the Daily Mirror that, of the Japanese investors who among them provide 140,000 direct jobs in the UK, “95% thought Brexit would be negative for their businesses and for UK jobs”.

Far from protecting our industries, Brexit would cost investment and British jobs.

Daniel Hannan did not respond to requests for comment.

 

Edited by Alan Wheatley

5 Responses to “EU not paying UK firms to outsource”

  • In addition, rather than the EU shooing companies away from the UK, our membership of the single market wins us vast sums in investment, both from businesses headquartered on the continent and international firms that want to use the UK as a springboard to access the bloc. Brexit would destroy thousands of jobs that this investment creates.

  • So why is the EU using tax payers money (including ours) to subsidise Turkey? It may (or may not) be true the EU was not providing funds to move the factory but that is a hell of a coincidence. Without that funding would Ford have moved production?

  • Your article lacks common sense take your first example. if FORD gets paid to build another factory but demand doesn’t increases they are obviously going to shut the old less efficient factory down. its not just a coincidence “it occurred around the same time”.

    You say its a “loan” but the interest rate is below that of normal interest thus it encourages them to move the factory.

  • So European tax payers get some of their money back in investments from the eu and they are supposed to be bloody grateful. Let me put this as simple for you. If you give me a £100 and I give you £75 back this constitutes as a great deal for you.