EU Referendum Battle Divides UK Businesses

Britain's car industry on Thursday backed the campaign to stay in the EU, but pro-Brexit supporters warned over red tape costs as the membership referendum battle shakes up the business community.

With less than four months until the vote, car industry body the Society of Motor Manufacturers and Traders (SMMT) revealed three quarters of its members believed staying in Europe was best for business.

However, pro-Brexit group Leave.EU published an open letter, signed by the bosses of more than 200 small businesses, urging Britons to vote to leave and slamming excessive EU regulation.

Britain faces a vital vote on June 23 to decide whether to remain in the EU, amid a deep split within the governing Conservative Party with Prime Minister David Cameron in favor of staying.

The SMMT survey, conducted by independent pollster ComRes, found the vast majority of car firms said Brexit would have a negative impact on them.

The poll covered 204 of the organization’s 475 members, included smaller suppliers as well as titans like Japan's Toyota and Germany's BMW.

- Europe 'vital' for carmakers -

A majority of 77 percent of respondents said that, if a referendum were held tomorrow, a "remain" outcome would be best for them.

Just nine percent argued that leaving would be the best option, while 14 percent were "uncertain".

"The message from UK Automotive is clear -- being in Europe is vital for the future of this industry and to secure jobs, investment and growth," said SMMT chief executive Mike Hawes.

"Our industry supports 800,000 jobs across the UK and contributes more than £15 billion ($21 billion, 19 billion euros) to the UK economy -- our members have clearly stated that pulling out of Europe could jeopardize this."

In addition, 66 percent of SMMT members think that access to EU automotive markets has had a positive impact on business. Other positive aspects given included access to a skilled workforce, and the ability to influence industry standards and regulations.

The survey also showed that 88 percent of large car businesses were against Brexit, with BMW, Vauxhall and Toyota vocal in their opposition.

That tallied with a letter published last week, in which the bosses of 36 FTSE 100 companies pleaded for Britain to remain in order to preserve jobs and encourage investment.

- 'Unnecessary' red tape -

However, small businesses argued Thursday that Brexit would allow them greater flexibility and adaptability -- and avoid costly red tape, according to a letter organized by Leave.EU.

"As entrepreneurs, we deal with the EU's constant diet of unnecessary regulations which add to our cost base, reduce our bottom line, and raise prices for our customers for no return," it read.

"The price for this is often the loss of jobs. If EU institutions are tone-deaf to the genuine desire for change to remain competitive, the EU is destined to fail."

In contrast, the boss of BMW-owned Rolls-Royce Motor Cars, Torsten Muller-Otvos, has written to all British workers to warn that an EU exit would drive up costs and affect jobs -- adding that free trade was "important" for international business.

“Tariff barriers would mean higher costs and higher prices and we cannot assume that the UK would be granted free trade with Europe from outside the EU. Our employment base could also be affected," he wrote in the letter obtained by The Guardian.

Later on Thursday, British finance minister George Osborne will insist that Brexit would mean "the worst of both worlds" at a business conference that will also be attended by German Finance Minister Wolfgang Schaeuble.

"British businesses have access to the largest free trade single market in the world, and many people's jobs and livelihoods in this country depend on that," Osborne was to say.