One of the most important and powerful bodies that the British people will look to for guidance in how to vote in the euro-referendum will be the Confederation of British Industry (CBI) and its pronouncements on whether or not staying in Europe would be good for British industry, jobs and competitiveness. It is worthwhile, therefore, to look at the historical record of the CBI and the body from which it sprang, the Federation of British Industries (FBI), to see how accurate their prognostications have been in the past, so here’s a brief historical overview of the organization’s capacity to peer into the future.
Founded in 1916 from 124 firms who each paid £1,000 to join, and incorporated by royal charter in 1923, the FBI was one of the most powerful voices in favour of Britain rejoining the Gold Standard in 1925, which led to catastrophic results for the British economy after the Wall Street Crash of 1929. Unable to float sterling, terrible credit squeezes led to massive unemployment and widespread distress, yet even as late as August 1931 the FBI was adamantly opposed to Britain ditching the Gold Standard, even though when the Government did escape its stultifying currency straitjacket a month later it greatly benefitted the British economy and led to renewed growth.
During the 1930s the FBI were fervent supporters of the economic appeasement of Nazi Germany, believing, as Sir William Larke, a leading figure in the organization, put it, that ‘negotiations between British industry and their opposite numbers in Germany’ would lead to better understanding between Hitler’s government at Britain’s. ‘In June 1937,’ writes Prof. Frank McDonough in his seminal book Neville Chamberlain, Appeasement and the British Road to War, ‘many sessions of the International Chamber of Commerce in Berlin witnessed a number of cordial speeches from British and German delegates on the possibility of economic collaboration,’ and between 1937 and 1939 ‘the drive for Anglo-German economic understanding reached its height,’ with the FBI overseeing 133 seaprate agreements between British and German business groups in 1938 and 1939.
Despicably, even on the day that Hitler’s tanks rolled into Prague on 15 March 1939, the FBI took the decision to carry on with a trade mission to Dusseldorf, on the grounds that ‘political differences have nothing to do with industrialists.’ In its internal memos meanwhile, the FBI advised member companies to wait before signing new deals with their German counterparts ‘until public opinion on this side had to some extent died down.’ The FBI then kept up its close involvement with its Nazi-controlled opposite number, the Reichsgruppe Industrie, right up to the outbreak of war in September 1939.
Similarly, during the Cold War the FBI and subsequently its successor after 1965, the CBI, constantly advised in favour of the economic appeasement of the Soviet Union and its Warsaw Pact vassal-states. Lenin famously said ‘We will sell the capitalists the rope with which we will hang them,’ and there was no stronger advocate for the appeasement of Communism than the CBI. With CBI-affiliated companies such as John Browne Engineering and GKN heavily invested in the USSR, and City firms such as Kleinwort Benson giving low-interest credit to Russia, it was perhaps inevitable that the CBI should have opposed imposing sanctions on Russia after the Soviet invasion of Afghanistan in 1979. Instead, it was the relentless pressure imposed by Ronald Reagan and Margaret Thatcher that eventually brought down the monstrous tyranny of Soviet Communism, which had to be done in the teeth of the appeasement advocated by the CBI and its predecessor. After all, ‘political differences have nothing to do with industrialists.’
One might have assumed that because Margaret Thatcher’s reforms of the 1980s were the best thing ever to befall British business, she might have been supported by the CBI, but not a bit of it. By total contrast, their director-general, Sir Terence Beckett, made a savage attack on the Thatcher government in his first speech in the post in 1980, calling for a “bare-knuckle” confrontation with her over her proposed trade union reforms. In her autobiography, Lady Thatcher wrote of how ‘The CBI was also, as usual, opposed to any “Precipitate” action.’ They undermined her in public as the legislation went through, even though ultimately they were to be the primary beneficiaries of measures such as the abolition of secondary picketing. Their arguments against trade union reforms were used by Jim Prior against her in Cabinet, and it was only once she had successfully seen the reforms through and brought round the economy, and after she won three elections in a row, that the CBI began exhibiting embarrassingly slavish devotion to her. (There is nothing the CBI admires so much as power, as their present lapdog attitude towards Brussels shows.)
Yet even beyond the world of politics, the CBI has consistently got things wrong. Even in the area of economics it has been consistently behind the curve, insisting on supporting the old thinking rather than the new. ‘In the 1940s, it was often for nationalization,’ points out Daniel Hannan MEP. ‘In the 1950s it was for state planning. In the 1960s, it was for tripartite industrial relations. In the 1970s, it was for price controls. In the 1980s, it was for the ERM. In the 1990s it was for the euro.’ Each time it adopted the view of the respectable Establishment tendency, and each time it was proved wrong by the forces of history.
In a 2015 CBI document celebrating the ‘highlights from the CBI’s first 50 years’, the CBI itself trumpeted the fact that in 1987 it had ‘called for full UK membership of the European Monetary System, arguing that the discipline of a more stable exchange rate could help to increase Britain’s share of world trade’. In fact British membership of the ERM led to interest rates hitting 15% in 1992 and millions of homeowners going into negative equity. Only after the UK crashed out of the ERM on ‘Black Wednesday’ on 16 September 1992 – against the CBI’s advice – did Britain enjoy a sustained period of economic growth.
With such a record it was perhaps inevitable that in 1999 the CBI would argue argued that joining the Euro would, in its own words, ‘deliver significant benefits to the UK economy’, including allowing British companies ‘to participate fully in a more complete and competitive single market’ and removing ‘from the UK economy the harmful impact of exchange rate volatility’. Yet what actually happened? Since the euro crisis began in 2009 several Eurozone countries have suffered economic depression, while the UK, which was able to devalue its currency, returned to economic growth.
With it’s by now well-established history of invariably getting all the important things wrong, the CBI has consistently supported transferring control from the British Parliament and courts to EU institutions. In 2000 it stated that the need for the Nice Treaty, which transferred further control to the EU institutions, was ‘pressing’. In 2008 it said that it ‘welcomes the attempt to clarify the role and remit of the EU’ in the Lisbon Treaty, which transferred yet more control from the UK to the EU. The result of greater EU control is that half the laws made each year which apply to the UK are now made by unaccountable and undemocratic EU institutions.
At its 2015 conference, the CBI invited four speakers who were in favour of VoteStay and not one who was in favour of VoteLeave, which gives one a clue as to their political stance today. So much for their former stance that ‘Political differences have nothing to do with industrialists.’
With this woeful, ninety-year record for failing to stand up for Britain, it is clearly is very important for the British people to find out from the CBI what it thinks about the coming euro-referendum.
And then do the exact opposite.