Paul Drechsler: the Irish voice of British industry unequivocal on Brexit danger

Paul Drechsler evidently relishes the current political brawl over Brexit.

“Trade deals are dog eat dog. There is nobody in this country experienced at negotiating them, not after 40 years of EU membership,” says the Irish-born president of the Confederation of British Industry (CBI).

“How long will it take to renegotiate the 53 trade deals Britain enjoys as a member of the EU? Switzerland took 15 years to negotiate theirs.”

The head of Britain’s largest business lobby is unequivocal: Britain needs to be in the European Union.

“Membership affords the UK tariff-free access to more than 500 million consumers – the most valuable market in the world,” he says.

“We have, without question, become a destination for foreign direct investment because we offer a platform into this market. I can’t believe that people don’t sort of get this . . . if we’re out, there is no clarity on what out looks like, and there’s no fast route to find out the answer,” Drechsler says.

In two years the Brexit camp has not come up with one credible piece of research that demonstrates what an alternative might look like, he says. "There's no plan B."

He adds: “If the referendum was solely about business and economics, it would be a very compelling one-way argument. But of course it’s broader and more complicated than that.”

The CBI’s plush new headquarters above Cannon Street Tube station are smack bang in the centre of London’s financial district – for many, the queen on the Brexit chessboard.

Europe’s financial capital

Predictions that London would cede ground to Frankfurt as Europe’s financial capital by staying out of the euro proved wrong. Brexiteers claim stepping back from the euro cemented the city’s predominance. The Remain camp insists leaving the EU altogether would destroy the city’s standing and cast it into financial obscurity.

I’m in London to interview Drechsler ostensibly on how he, an Irishman and Trinity graduate, rose to the top of the British business establishment, but the conversation keeps reverting to June 23rd, the date of the Brexit vote.

“This is the biggest and most important decision in a generation,” he says.

But what of suggestions the Leave camp are fighting a more dynamic campaign?

“If you’re just coming out with headlines that are exciting, it’s easy. Look, any campaign that comes out and says Bosnia, Albania and Ukraine are models for the UK . . . that just says their propensity to grab headlines is fantastic.”

Justice secretary Michael Gove, viewed as the brains behind the Leave campaign, scored something of an own goal recently by holding up Albania as a model for post-Brexit Britain.

He was compelled to avoid citing more prosperous models such as Norway and Switzerland, which are part of the European Free Trade Area, as their access to the free market comes with a price tag – the free movement of workers, a reason many Eurosceptics want out.

Gideon Rachman of the Financial Times described Gove's Albanian gaffe as "a fit of intellectual honesty".

The polls point to an incredibly tight race. A recent poll of polls from non-partisan group, What UK Thinks, show both sides, excluding undecideds, neck and neck at 50/50.

What about the erosion of sovereignty, the unfettered migration and the exacting red tape that comes with EU membership? Are these not genuine concerns?

Drechsler says these concerns must be weighed against the economic prosperity Britain has enjoyed as part of the EU.

The country he now considers home limped into the EU in 1973 as the sick man of Europe. GDP per capita was growing at half the rate it was in West Germany, France and Italy.

In the subsequent 43 years, Britain’s GDP grew significantly faster than any of the other three. In 20 years, on current rates, it will be the biggest economy in Europe.

Research

The CBI’s chief contribution to the referendum debate was a piece of research published in February, which suggested that British households were better off to the tune of £3,000 as a result of EU membership.

It bases this figure on a review of the most credible academic studies on the impact of EU membership, judging the net benefit to be about 4-5 per cent of GDP, equating to £73-91 billion, which is where the £3,000 figure comes from.

Contrary to the prevailing notion that Britain needs Europe, many believe the EU needs Britain just as much and will move to facilitate it in the event of a Brexit. However, Drechsler argues there is no way Brussels can offer Britain better access to the single market without the free movement obligation.

He believes a vote to leave will result in a significant economic shock, resulting in a major devaluation in sterling and an instant reversal in GDP.

“The problem in today’s world is we are highly interconnected and when you knock one domino over you don’t know what impact it’s going to have.”

The CBI’s official position is that leaving the EU could blow a £100 billion hole in the British economy and result in the loss of 950,000 jobs by 2020, a forecast the Leave camp describes as scaremongering.

Uncertainty surrounding the outcome has already led to a significant devaluation in sterling while factory output has shrunk for two successive quarters as firms defer investment decisions.

And the likely implications for Ireland if Brexit comes to pass?

“If the UK sneezes, Ireland catches a cold. It’s difficult to see – given over €1 billion a week of trade, given the sheer amount of Irish exports into the UK – how an economic slowdown in the UK would not have negative impact on Ireland,” he says.

However, he believes Northern Ireland would be a far bigger casualty.

“Who is going to invest in a Northern Ireland that is not a gateway to the EU?”

Drechsler's rise to the upper echelons of the British business firmament came courtesy of Imperial Chemical Industries (ICI) – for a time the largest manufacturer in the country.

After graduating from Trinity with an honours degree in engineering in 1978, he went to work for the company on Teeside in the north of England on what he describes as “big, bulky ammonia and methanol fertiliser plants”.

For the next 25 years he held various senior positions in the company, at one stage heading up its Latin American division from São Paulo in Brazil.

He also did stints in the United States and the Netherlands before returning to the UK as chief executive of ICI Fibres, one of the company’s principal international businesses.

After stepping down from ICI in 2004, he joined the Wates Group, one of Britain's oldest private property companies, first as chief executive and later as chairman. After 10 years with Wates, he joined another one of Britain's oldest family-run businesses, Bibbyline, formerly a shipping company but now more associated with financial and logistical services, where he is now chairman.

He is also chairman of Teach First, a social enterprise group which addresses educational disadvantage in England and Wales.

Last year, he was afforded a CBE in recognition of his accomplishments in business. While he considers Britain home, he still regards himself as Irish “and European, of course”.

Castlebar hat factory

Drechsler traces his roots to Czechoslovakia. His great uncle, Frank Schmolka, came to Ireland from Czechoslovakia in the 1930s to set up a hat factory in Castlebar with the support of the then Irish Trade Board and arranged for visas for 10 or 12 Jewish relations.

Paul’s father, Frank Drechsler, was sent by his family to Ireland in 1939 at the age of 16, with his brother Hanus (18), to work in their uncle’s factory as war broke out across the continent.

Frank later graduated from University College Dublin with a first-class honours in civil engineering and went on to become a recognised expert in metallurgy and one of the founding academics of Trinity’s Business School. Engineering, it seems, is very much in the blood.

But were his Irish roots a hindrance or a help in rising through the British business ranks?

“Devoted parents and a loving family, a great education and a Trinity degree provided the platform to develop my career,” he says.

Working in the UK during the Troubles was difficult for many Irish people but Drechsler says he never felt judged.

Somewhere along the way, he became a member of CBI, initially chairing its energy policy committee before becoming a board member and taking on the role of president in 2015.

Did he not baulk at the idea of leading Britain’s main business lobby during the potentially divisive EU campaign?

“When the phone call came I jumped at the chance,” he says.

It hasn’t been that smooth, however. Anti-EU protestors at a CBI conference in November heckled and held up a banner saying CBI=Voice of Brussels. The group was also accused of “jumping the gun” in coming out in favour of staying prior to prime minister David Cameron brokering his deal with Brussels.

Only 5 per cent of CBI members support the Leave campaign, with 80 per cent backing Remain and 15 per cent undecided.

“Overall, from a CBI point of view, it’s unambiguous, most want to remain in the EU,” Drechsler says.

I put it to him, however, that the business community isn’t totally in favour of Remain, citing the 250-strong list of business leaders that signed up to the Leave campaign in March, including an ex-HSBC boss, the chairman of pub chain JD Wetherspoon and the co-founder of Carphone Warehouse.

“Name me a creditable business on that list,” Drechsler says.

More recently, the bosses of some of Britain’s biggest companies, including budget airlines EasyJet and Ryanair, defence contractor BAE Systems and oil group Shell, have come out in support of the UK remaining inside the EU.

Reticence

Drechsler acknowledges there has been reticence on the part of some businesses to getting involved, particularly in retail, where companies do not want to be seen to be telling their customers how to vote. However, he believes the expressing of opinions is too often conflated with telling people how to vote.

“Obama didn’t tell anyone how to vote by simply telling Britain where the US stands,” he says, referring to the US president’s warning that Britain would be “at the back of the queue” for trade talks with the US if outside the EU.

“The bottom line is priorities are determined by value and, if you represented 500 million consumers, you’re bound to have a higher priority than if you represented 60 million.”

Drechsler says the breakdown of consensus politics and the rise of economic populism has been one the defining dynamics globally since the financial crisis. He points to the Jeremy Corbyn’s rise in the UK, Bernie Sanders and Donald Trump in the US, and even reversals suffered by Fine Gael and Labour at the last general election here.

“People are telling leaders that they don’t trust them.”

“That’s what makes the world quite fragile. So it’s another reason why doing things that will tip the balance are just not sensible. If ever there was a time to rock the boat, it’s not now,” he says referring to Brexit.

“If rock-solid economic growth is unexciting then yes, it’s unexciting to remain. Our story is, to a great extent, ‘Let’s build on 40 years of success and have a stronger future.’

“It’s not about headline-grabbing; the facts are [that] if you want growth, if you want jobs, if you want investment then stay.

“If that’s not exciting and you want to be like Bosnia or Albania then leave,” he says, before asking his assistant if he was laying it on a bit too thick.

CV

Name: Paul Drechsler

Age: 60

Martial status: Married with three children

Position: president of the Confederation of British Industry.

Why is he in the news? He is fronting Britain’s largest business lobby ahead of the country’s crunch vote on EU membership.

What you would expect: As president of an organisation with a global outlook, Paul’s career has seen him work in many locations across the world.

What you wouldn’t expect: he owns at least one copy of each of Eric Clapton’s albums.