British soccer star David Beckham, who played for Major League side LA Galaxy, is right to urge his countrymen to vote Remain in this Thursday's referendum on the UK's membership of the EU. As a British entrepreneur who has done business all over continental Europe and the US, I too am concerned about the impact of the referendum not only for my own country but for transatlantic relations too. The vote may be taking place 3,500 miles away but the outcome of this week's vote will have far-reaching consequences, including for the US, and its relations with the UK.
There are some who believe that because of the Europe's declining share of global wealth, the UK should look to other parts of the world for its economic future. It is true that the EU's proportion of global GDP is in decline (from 18.6% in 2013 to 10% in 2030), but this is the case for the US too (from 32% to 21% over the same period).
Both Europe and the US are highly advanced industrialised economies, and many other parts of the world, including swathes of Asia and Africa, have a lot of catching up to do on the economic cycle. Of course, relations with the economic powerhouses of China and India are important, but the UK is better able to maximise the potential of these relationships inside the EU. Overall, a Brexit would damage the UK economy, stymie growth and put immense pressure on the pound. The IMF has repeatedly spoken about the economic risks. Meanwhile, the UK government has warned that it could lead to a recession, entailing 500,000 job losses and a 3.6% fall in GDP.
The EU single market, covering 28 countries and 500 million consumers, is by far the UK's largest trading market. That should not come as surprise. The natural inclination is to trade with your neighbours. It is true of my own business experience. After I established Travelex, the foreign exchange company, in 1976, our first overseas forays were to the Netherlands and Belgium ten years later. Shortly after we started to expand into the US, initially opening branches in New York's JFK Airport in 1989.
There are three compelling reasons why I believe that a vote for Britain to remain in the EU would be good for transatlantic relations. The first is focused on what businesses based in Britain say. The majority of businesses support continued membership of the EU, and this includes many US businesses with operations in the UK. For one, the US bank, JP Morgan has said that it may cut 4,000 jobs in the UK in the event of a Brexit. The voice of US businesses in Britain is an important one because of the close economic ties; the US remains the UK's largest single country export partner.
US business, like a lot of foreign business outside the EU, sees the UK as an important gateway to the rest of Europe. It is no coincidence that 60 per cent of all European headquarters of non-EU firms are based in the UK. Further proof is shown in a recent survey of UK and US businesses, whereby 88% said that access to the single market made the UK a more attractive destination for their companies.
Second, businesses on both sides of the Atlantic are set to benefit from the Transatlantic Trade and Investment Partnership, reducing trade costs and lowering the cost of goods. A successful deal could ultimately provide a £10 billion windfall to the UK economy. It is estimated that 13 million jobs are linked to the overall trade between Europe and the US, and a comprehensive settlement would provide a further fillip. Some advocates for leave optimistically assert that they would be able to negotiate an even better trade deal for the UK with the USA. But this is, at best naive, at worst simply misleading. As President Obama made clear on his recent visit, a Brexit would place the UK at the back of the queue for trade talks.
Third, the strong view of the current US administration, and previous ones of differing parties, has been to support the UK's membership of the EU. President Obama did not mince his words in April: "Having the UK in the European Union gives us much greater confidence about the strength of the transatlantic union. We want to make sure that the United Kingdom continues to have that influence." The friendship between our two countries runs too deep for us to dismiss glibly such sentiment. The UK can show leadership in the world, not by abandoning its European ties, but embracing them. These can sit alongside the UK's "special relationship" with the US, Commonwealth ties and membership of several other key global forums. The UK is part of a number of the top teams in the global order and should think carefully before pressing the self-destruct button.
This Thursday's vote is a vote for the British people, but I hope those with business and other ties to the US, bear in mind some of these factors. Beckham is spot on to say that: "For our children and their children we should be facing the problems of the world together and not alone." There is sound ground to suggest that a No vote would have an adverse impact on UK-US relations.
Lloyd Dorfman CBE is the founder and president of Travelex, and the Chairman of The Office Group and of Doddle.