Not so splendid isolation? Nestlé exec warns UK on EU exit

Last updated on 29-Jan-2014 at 13:38 GMT2014-01-29T13:38:06Z - By Ben Bouckley+
Nestlé chairman Peter Brabeck-Letmathe warns the UK that 'economic isolation' if it leaves the EU (Picture: Nestlé)
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Nestlé chairman Peter Brabeck-Letmathe has warned that the United Kingdom would suffer economic isolation if the nation decides to leave the European Union.

The executive (pictured) was interviewed by Sky News at the World Economic Forum in Davos, Switzerland late last week, and he sounded a warning ahead of the possible referendum on Britain’s EU membership in 2017.

A bill currently before the UK parliament aiming to guarantee a referendum is being opposed by the Labour and Liberal Democratic parties.

But even if this bill is passed – it will reach the committee stage of the House of Lords on January 31 – it does not guarantee a referendum, since no UK parliament can bind its successor.

‘It would isolate the UK economically’

But foreign secretary William Hague said on Sunday that the Conservative Party, which is the majority partner in the ruling coalition, would retain a referendum pledge as party policy if it wins the 2015 general election.

Brabeck-Letmathe said in Davos that Nestlé – which employs circa. 8,000 staff in the UK, brands include Nescafe – was committed to its UK business.

But from a purely economic standpoint, Brabeck-Letmathe said he didn’t believe the UK’s withdrawal from the EU would benefit any of the nation’s industries.

“It would isolate the UK economically. Every company would be forced to re-evaluate the implications of investing in the UK. It would no doubt have an impact on its ability to supply European markets.”

EU achievements outweigh weaknesses?

Brabeck-Letmathe also praised the EU and the single currency as an "incredible success" – perhaps not surprisingly given the advantages it lends a multinational company such as Nestle, since the euro removes cross-border exchange rate uncertainty, risk and cost.

“The EU is full of failures and weaknesses like any large institution, but its achievements are greater. We have to work to strengthen the internal market.”

Recent Nestlé investment in the UK includes a £110m ($182m) investment to triple production of Dolce Gusto capsules in Tutbury, Derbyshire with 12 new high-speed lines - begun in 2011 and completed in 2013.

Nestlé Waters has also invested £35m+ at a new waters factory in Buxton, Derbyshire, which it claims will allow it to produce what the company claims are the most lightweight PET bottles on the UK market.

“The Buxton factory is an excellent example of how we are continuing to invest in Europe despite tough economic conditions,” said Nestlé CEO Paul Bulcke, when the site opened in March 2013.

FDF supports 'key role' for Europe

Asked for its position on EU membership, the UK Food and Drink Federation (FDF) sent a statement from director general, Melanie Leech, who said: “Europe has a key role to play in meeting the growing global demand for food while adapting to the impacts of climate change and dwindling resources.

She added: "UK food and drink manufacturers want to be part of a strong, outward facing, competitive Europe that leads through innovation supported by science and evidence-based policy making. The EU must break down the barriers to trade and deliverfood security for its citizens as well as shared, significant and sustainable growth.”

*Regarding our title, the phrase 'splendid isolation' is fitted to UK Euroscepticism, and seems to have first appeared in The Times newspaper on January 22 1896, where the journalist paraphrased a comment by Canadian finance minister George Eulas Foster, who told his country's parliament: "In these somewhat troublesome days when the great mother Empire stands splendidly isolated in Europe."

Related topics: Manufacturers, Nestlé, Soft Drinks & Water, Hot Drinks

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