The Institute of Fiscal Studies (IFS), a widely respected independent think-tank, has warned that the cost in reduced growth to Britain if it leaves the Single Market, following the Brexit vote, may be as high as £70 billion.
The IFS study, which was funded by the Economic and Social Research Council (ESRC), comes shortly after EU leaders warned that the UK could not remain a full member of the Single Market unless it agreed to the free movement of EU migrants. The report scotches talk of having access to rather than membership of the Single Market as “virtually meaningless” while detailing how the benefits of membership (boosting trade, growth and living standards) dwarf the costs.
The report’s author, IFS research associate Ian Mitchell, told The Telegraph: “There is all the difference in the world between ‘access to’ and ‘membership of’ the single market. 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 study found that new trade deals would be unlikely to compensate for the loss of EU trade, which presently accounts for 39 per cent of UK service exports and 44 per cent of British exports.
Figures released this week from the Office for National Statistics reveal that in June, the UK exported £12 billion worth of goods and services to our European neighbours, a rise of £500 million on the previous month.
“Access” to the European Market, the IFS explains, is open to any country in the WTO, but “membership” of the Market guarantees the elimination of trade barriers in a way that no free trade area, customs union or trade deal achieves.
An indicator of the effects of Brexit uncertainty came last week from the Recruitment and Employment Confederation’s latest Report on Jobs, produced in conjunction with research company Markit. Permanent hiring was significantly muted in July, which prompted REC CEO Kevin Green to describe the UK jobs market as suffering a “dramatic freefall.”
Permanent hiring tumbled to its lowest level since 2009 – the depths of the recession. However, Umbrella Company Employees and other contracting professionals appear to have been the chief beneficiaries of the economic turbulence occasioned by the Brexit vote: temporary/contracting placements continued to grow in July.
Meanwhile, the latest meeting of the REC’s Marketing, Media, Creative and Comms (MMCC) sector group also forecasts a slowdown in permanent hiring and a shift towards short-term contract staff during the period of Brexit uncertainty.