Tesco chairman warns companies will quit UK in event of EU no vote

Reuters / Luke MacGregor
John Allan, the new chairman of Britain’s biggest supermarket chain Tesco, has warned that major international companies will quit London and move their headquarters to other EU capitals if Britain vote to leave the EU.

Mr Allan has slammed plans by the Conservatives to hold an in-out referendum on Europe, saying it creates uncertainty among investors.

Mr Allan said Prime Minister Cameron’s plans to hold a referendum before reforms are negotiated is putting “the cart very firmly before the horse.”

The new Tesco boss explained that London has more regional and global headquarters of international companies than any other city in the world, and that while it might be difficult to relocate factories, moving head offices was fairly easy, he said in an interview with the Independent on Sunday.

“Something that could make a difference is a perception that there is a real risk of the UK leaving the European Union. If people believe in a scenario where there is a Conservative government and they honor their pledge to hold a referendum in 2017, but the negotiations don’t go well with the EU and the referendum is lost – I think that could have a bigger impact on people’s investment decisions,” he said.

He added the logical way to go about reforming the EU would be to negotiate first, and when the process is complete determine if a referendum is really necessary.

READ MORE: Brussels scuppers Cameron’s EU referendum pledge

Mr Allan’s comments come after the chief executive of Royal Phillips the Dutch electronics group told the Telegraph it would be “a real loss if the United Kingdom would not be part of Europe.”

Mr Allan who made it clear he was not affiliated to any political party said all of them should be careful about their immigration plans and warned not to “lock the door and throw the key away,” by putting off skilled people from coming to the UK from abroad.

“All the political parties have been spooked by UKIP into making commitments on immigration. There are problems... that need to be sorted out, but I think the answer is not to lock the door and throw the key away,” he said.

He didn’t put his name to a letter signed by 103 business leaders to the Telegraph warning that a Labour government would be bad for the economy and instead said: “Companies have to work with whatever the government of the day is going to be and I don’t think they should choose sides in a party sense.”

He also criticized plans by the Labour Party to introduce a mansion tax on any property worth over 2 million. He said there was a lack of clarity on how it would be introduced and that it was “pretty difficult to justify.”

READ MORE: ‘Brexit’ from EU could cost UK economy £56bn each year – think tank

Mr Allan became chairman of Tesco’s in March, after a turbulent time for the supermarket. It was rocked by an accounting scandal last year and has seen its popularity plummet as discount stores like Aldi and Lidl have taken some of its market share. Tesco is expected to announce its profits fell 66 percent last year.