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The research, The economic impact on services from the UK losing Single Market access, was written by the respected, independent think-tank, the Centre for Economics and Business Research (Cebr), commissioned by the Open Britain campaign.
The study shows the potential impact of having a trade deal that covers goods but not services. Given the Government’s choice to leave the Single Market and Customs Union and to impose ‘red lines’ over ending the freedom of movement and ending the jurisdiction of the European Court of Justice this is a very real scenario.
The key findings of the report are:
Leaving the Single Market in services could lead to a loss in of between 1.4% and 2% of GDP, or between £25 and 36 billion a year.
Little or no preferential access to the Single Market in services would have a particularly negative impact on financial services, IT and telecoms and transport – all of which will register export losses of 15% or more.
The service sector where the Single Market has the biggest impact in absolute terms is financial services, which would account for about a third of the losses.
Unless these losses are offset through new trade relationships, there could be a decline of between 9.5% and 14% in the UK’s total service exports, which would be an annual reduction of between £21 and £30.5 billion in UK exports.
Restrictions in labour mobility and insisting on complete regulatory autonomy could result in losing access to parts of the Single Market in services. Reaching an agreement on access may require certain compromises to be made on “red-line” issues.