Analysis: How reform of the EU could create retail growth, investment and employment

It is an issue that polarises opinion and, in the wake of the EU’s problems addressing the economic crisis in Greece and the migrant and refugee emergency, could become even more divisive.

The prospect of a so-called ‘Brexit’ is real. A Survation poll for the Mail on Sunday revealed that 43% of people favour leaving the EU.

But the debate and its outcome will not simply have political repercussions.

For UK retailers, many of whom have expanded in Europe, the decision could affect the way business is done across the continent.

Importance of retail

UK Prime Minster David Cameron is urging renegotiation of EU membership terms.

As the referendum moves closer, retail trade body the BRC this month publishes a white paper on EU reform priorities.

The BRC argues that the retail industry is vital to employment, innovation and investment across the EU but that the sector should be “considered and treated as a strategic industry for the EU economy”.

It maintains that creation of a “fully functioning” single market is vital to EU reform, and would benefit consumers and retailers alike. At present, there are wide disparities across the EU.

The BRC points out: “20% of non-food products are subject to different national rules meaning they can be sold and used in some member states but not in others so we need greater harmonisation of EU product legislation.

“The Commission should initiate a comprehensive review of all national regulations on non-harmonised products with a view to removing those that no longer have an objective justification and extending across the EU those that are justified.”

Ecommerce across borders

The BRC also argues that it is important to create an environment in which ecommerce can flourish across borders and that a “digital test” should be applied to new single market rules, enabling retailers to “pursue seamless cross-border multichannel strategies”.

There should, for instance, be reconciliation of the 28 sets of consumer guarantees that are now in place and “as much European consumer legislation as possible should be fully harmonised”.

And, vitally, there must be a level playing field across the EU. While in Britain international entrants can open and compete easily, “UK retailers do not always have the same experience elsewhere in Europe”.

That means there should be “a clear process for raising concerns about national legislation”.

Businesses asked to stay silent

Such is the sensitivity about the EU renegotiation and vote that Cameron has urged businesses to keep silent rather than speak out if they are in favour of the UK remaining a member.

However, many retailers will be viewing the possibility of exit with alarm. In their own commercial interests and given that retail is the UK’s biggest private sector employer, will they think it right sit on their hands?

While they will not see it as their responsibility to tell people how to vote, they may want to point out some of the implications of membership and exit.

The referendum is likely to prompt strong views among shoppers and retailers on both sides of the debate.