Sorrell: UK business should speak up, as ‘Brexit would be damaging’

Sir Martin Sorrell [Daniela Vincenti]

EXCLUSIVE / Responding to Prime Minister David Cameron, who, in September urged UK business leaders to stay out of Britain’s EU membership debate, Sir Martin Sorrell told EURACTIV that a Brexit would be damaging for companies.

Sir Martin Sorrell is the Chief Executive Officer of WPP, the world’s largest marketing communications group – which includes Ogilvy & Mather, Burson-Marsteller, Hill+Knowlton and Mindshare. He is one of the most respected global industry leaders.

Sorrell spoke to EURACTIV’s Editor-in-Chief, Daniela Vincenti.

You are here in Brussels to talk about ‘Communicating Europe’. Have we failed to communicate Europe, especially in the UK?

The honest answer is probably yes. My personal view is that we’ve tried, but failed. If we’re talking about communicating the British referendum, then we’re only in the early stages of that, but time is marching on.

If you look at opinion polls (not that opinion polls have any credibility in the UK anymore after what happened in the last election) there was a significant gap in favour of staying ‘in’. That gap has been gradually whittled away, with both sides quite even now. But because of the proportion of ‘don’t knows’, it’s a difficult situation to read. It’s fairly even-stevens right now. Communications and clear articulation of what the issues are will therefore be extremely important.

If you had to create a narrative for Europe, how would you go about it, and which one would that be?

My own view is that if the UK is going to compete internationally, rather than plough its own furrow outside Europe, it would be better off being inside the tent. 

If we are going to seek changes in the EU, we should seek them from within, not from without.

The prime minister’s renegotiation is an important issue, because the polls show that if he’s successful, people would vote to stay in. Whether it’s clear what the terms of that renegotiation are is another question.

My view is that whatever he is able to achieve, we should vote to stay in. If we are going to then seek further changes, we should seek them from within, not from without.

If you look at the world economy, roughly $72 trillion, the US have $16-17, China about $10, the counterbalance from an economic point of view is the EU, which stands at around $16 trillion from a population of around 500 million.

The UK’s trading patterns are interesting. The president of China is there currently and India’s PM is soon to visit, yet the UK’s traditional trade and investment patterns are not with China and India. China’s stands at only 4%. It should, clearly, be more, on a weighting basis. But our heritage, our traditional patterns in terms of investment, foreign direct investment, trading, is with Europe. This is something we are going to have to keep in mind.

We can throw in the GDP and trade figures, but is that enough? How do you sell the EU emotionally? Is it a matter of the brain, or a matter of the heart?

Communications can’t be top-down. The nature of the communications, whether they be commercial, political, economic, social, has changed.

People no longer like to be directed, they like to reflect, have their own opinions. Call it crowdsourcing or whatever, they like to be engaged in the process.

Governments’ communications tend to be unintegrated

In defining what the message should be, these constituencies have to be engaged with in a very effective way. That’s the critical thing.

Government communications tend to be ‘unintegrated’, it’s not cohesive. This applies when talking about one single country, let alone the EU. In one country, different ministers have different views on communications, often even employing different agencies. What you end up with is an uncoordinated approach.

An example of a country that has a more coordinated approach is Singapore. A country of 5 million people, a history of direction, autocratic to some extent, which is extremely effective in terms of communication.

The British government has done a good job in the ‘Great Britain’ campaign, in which we are involved. It uses the same template as other campaigns. At EU-level it would be challenging, as I’m to understand, the current COR (Committe of the Regions) plenary is one of the only instances during the year where all regional delegates meet up.

Do you think governments are adapting to new digital trends, which are fragmenting audiences? Are they where audiences would listen and engage?

Indeed, that makes it much more difficult to plan and implement. But it is much more effective consequently.

How would you go about the ‘Yes’ campaign?

Having determined what the message is going to be, through research or whatever, identifying the ‘no’ voters and the undecided would be the first port of call.

The communication you’ve just described as fragmented, I would in fact describe as targeted. Social media allows so much more information about demographics.

These fragmented media have specific relationship with you or I, so they can be targeted much more effectively.

First there is a sort of planning phase, then a creative phase where the campaign is developed, then it’s precisely targeted, much more precisely than in the past.

Right. But so far there seems to be much more passion and energy in the ‘No’ camp. Business for Britain is one of the best-organised groups. It has already produced an impressive 1030 page book. So, how do we bring organisation and passion to the ‘Yes’ camp?

There are difficulties in the anti-Europe camp. They are split into two. They are well-financed, because they have individuals financing them who are passionately devoted to the cause and who are willing to back their convictions with large sums of money.

Difficult for businesses in the UK to contribute financially to the campaign, because approval has to be given by shareholders

It’s quite difficult for businesses in the UK, for example, to actually contribute financially, because approval has to be given by shareholders.

There’s a timing issue, but even if that’s overcome, many shareholders will say they don’t want corporate funds being directed towards this issue, even if it’s in the interests of the corporation to stay in the EU. It is easier to say no than yes.

Indeed, UK businesses have been told to shut up about Brexit.

I don’t agree with that. I believe that if you’re running a business and you believe that it’s in the interests of your company, you should say what you think.

Having said that: there shouldn’t be internal pressure within a business to go in that particular direction.

If businesses want to go global, then they have to use a trading bloc such as the EU to get there

If you ask me about Brexit, I would express a personal view only. A third of our revenues comes from Western Europe and my feelings would be based on this information.

In the short term, I think an exit would be quite damaging. Long-term, people would try to rectify the situation. It’s not a view I’m going to ram down the throats of our employees.

There must be something more to be said about how to trigger a more emotional campaign.

We can talk about the emotional side of things, but my personal view is based on this aspect: Is Britain going to be successful on its own? Can it be part of a greater project?

There are big projects out there, China and India for example, in terms of establishing trade, investment and cultural connections.

If businesses want to go global, then they have to use a trading bloc such as the EU to get there. It provides very effective organisation and structure that facilitates expansion. I do think that the battle will be primarily fought on economic and financial grounds. You are right that people’s emotions have to be engaged with also though.

The ‘No’ camp is very effective with that. Take Nigel Farage. He paints an idealised picture of Britain. He connects with a pint of beer in one hand, and a cigarette in the other, while the others give the impression of being stuck in the Westminster bubble.

It’s easy to take a populist line, especially on the issue of immigration, which is generally one of the top issues in Europe.

Since the UK election, immigration has become even more of a hot topic. It’s easy to take such a negative, deconstructive line. It’s not an attempt to build something, it’s an attempt to destroy it.

If you had to come up with three stories in your ‘Yes’ narrative what would these be?

The first thing would be the European project. This gets at the emotional, passionate aspect of the voter, a project that was born out of fear of repeating the wars of the past.

A project? Maybe belongs to the European family?

Ok. The European family. The second thing, and this is a left brain-right brain scenario, is finance. Less attractive than the emotional aspect, but more practical, at a time when people are concerned about jobs and the lack of economic prosperity.

Staying in is a a question of the head and the heart

We can forget about a third thing for now, it’s a question of the head and the heart for now. A third thing could be the inefficiency linked to the large scale. There’s a trend in the creative industry to think that the bigger you get, the worse you get. That’s why we tend to keep things smaller and fragmented, giving people a greater sense of identity. Much like our own business model at WPP, the benefits of membership have to be demonstrated, I think there’s a parallel there with the EU.

That’s why we need to avoid talking about an ever-closer European integration?

It’s the same with our company. Some people play the team game, the cooperating game, and there are some that don’t. The closer you get to the top of these organisations the more difficult it gets, due to ego, power and territorial issues.

The more the electorate see the benefits of the solution we are talking about, the better it will be.

The closer you get to the coalface, the more passionate people get about working in different areas, different organisations; they are more interested in reaching a solution because they see a more varied range of solutions. The more the electorate see the benefits of the solution we are talking about, the better it will be.

Do you think the UK, since 1973 (when it joined), has failed to properly play its cards on sovereignty?

I’d use the example of Margaret Thatcher, a great country-manager, concerned about surrendering her power to a European ‘regional manager’.

Putting Europe together many years ago, commercially, was difficult. I think that one of the arguments Farage will use is this very issue: sovereignty and loss of powers.

Last but not least, Europe’s competition chief ordered the Netherlands to recover €20-30 million in back taxes from Starbucks, and Luxembourg to get the same amount from Fiat Chrysler. What do you, as a businessman, think of the crackdown on companies for tax avoidance?         

I was asked before about the case of Google’s tax avoidance, I said that paying corporate tax is a matter of judgement. I was misinterpreted on this. I said that if you go by the letter of the law, minimise tax rates, you are going to cause repercussions.

What I meant by ‘judgement’ was that we could bring tax rates down to 10%, they’re roughly 20%, but we don’t because we think it would be too aggressive. Now, those chickens have to come home to roost.

I can’t comment on Starbucks or Fiat because I don’t know the details. But I know that some people take an extremely aggressive posture on tax avoidance. The other thing is that governments need money.

Their interpretation of the rules in this environment, at this point in time, is going to be different to what it was 10 or 15 years ago.

The third thing is that there is a race to the bottom in terms of corporate tax rates in various countries, the UK being a good example. Lots of things have changed, but I still stick by what I said two years ago, that it is a question of judgement.

If you overstep the mark and are too aggressive then, at some point in time, it’s going to rebound on you. I’d predict that corporate tax rates around the world are going to rise, because governments need money to fund deficits, welfare and social projects. In terms of the EU, the related issue is efficiency, given the budgets of the Commission et al there has to be more harmonisation, otherwise there will be too many anomalies.

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