Leaving single market post-Brexit could cost Britain's economy up to £70bn, IFS warns
The Institute for Fiscal Studies (IFS) has warned that leaving the single market could leave Britain £70bn worse off due to slower growth ($91bn, €81bn).
Remaining in the single market could deliver a 4% boost in national income to the British economy, equivalent to two years worth of growth, the think-tank said on Wednesday (10 August). Retaining access to the single market without being a member was “virtually meaningless”, the IFS said in its report, adding the benefits to economic growth, living standards and trade outweigh the cost of Single Market membership.
“Any country in the World Trade Organisation – from Afghanistan to Zimbabwe – has ‘access’ to the EU as an export destination,” the IFS said.
“Single market ‘membership’ by contrast involves elimination of barriers to trade in a way that no existing trade deal, customs union or free trade area achieves.”
The report comes after European policymakers have warned Britain that it will not be able to retain membership to the single market, unless it agrees to the free movement of European citizens.
Leaving the pan-European market would save Britain approximately £8bn a year in budget contributions, but the loss of trade deriving from Brexit could have a much bigger impact on the government’s coffers.
According to the IFS, new trade deals would be unlikely fill the gap created by losing EU trade, which accounts for 44% of British exports and 39% of service exports.
“There is all the difference in the world between ‘access to’ and ‘membership of’ the single market,” said Ian Mitchell, research associate at the IFS.
“Membership is likely to offer significant economic benefits particularly for trade in services. But outside the EU, single market membership also comes at the cost of accepting future regulations designed in the EU without UK input.”
The report comes after data released on Tuesday showed that Britain’s deficit on trade goods in the month leading up to the Brexit referendum hit its highest level since March 2015, after growing to £12.5bn compared with the £11.5bn recorded in the previous month – a figure which was revised upward from the initial £9.9bn estimate.