Mark Wilson, chief executive of British insurer Aviva
, has come down hard against an EU exit in an opinion piece in the Standard regarding the impending June referendum on the UK’s membership in the European Union. As head of a business that manages risk, he elaborated on various challneges the UK faces in case Britain decides to leave the EU.
Wilson enumerated four major risks. First was the impact uncertainty would cause on sentiments: business sentiment, consumer sentiment, and market sentiment. When faced with uncertainty markets become volatile. This results in lowered confidence, equities, and sterling. The main uncertainty is how much and for how long will the falls continue.
Second risk is with trade. Wilson says that he is in favour of free trade, and putting barriers to trade is a step backwards. Not just tariffs and quotas, but the non-tariff barriers from leaving the single European market will slow down trade and hurt UK exports.
The third risk is lower growth. In the long term, the lower GDP for the UK may persist until 2030, with PwC foreseeing GDP to be 1.2% to 3.5% lower. To put it in perspective, that’s £25 to £65bn – more than the UK’s entire defence budget. As Wilson puts it simply, “If the economy grows less, people will be poorer and there will be fewer jobs. If the stock market falls, their pensions will be smaller.”
For the final risk, Wilson said that the uncertainty will impact the City of London, which is a gateway to the EU and an enviable financial centre. Leaving the EU closes that gateway.
In the event of an exit, new trade agreements will have to be negotiated, which may take up to a decade. A decade of uncertainty, in Wilson’s words, is kryptonite to businesses.
On the other hand, the Aviva
boss said that there are some changes the EU must undertake to remain relevant in changing times: less bureaucracy, more competitiveness, and more externally focused and pragmatic.
In conclusion, he said that it is not worth it for the UK to leave the EU, “because there is no insurance policy against Brexit.”