According to a new report, losing single market access could cost the UK economy around £36bn.
If Britain does leave the single market to stop the free movement of people, the UK could lose between 1.4 and 2 per cent of its gross domestic product.
The study, carried out by the Centre of Economic Business Research for the Open Britain, the group that is fighting a hard Brexit, says that leaving the single market could negatively affect financial services, telecoms and transport.
It also is investigating the potential impact of securing a fresh trade deal with the EU that extends to the exchange of goods and services.
Launching last week, the Conservative manifesto pledged a hard Brexit, committing to curbing immigration. The Tories are widely expected to easily clinch a majority in the upcoming general election, despite a recent Labour surge in the polls.
It appears that the Conservatives would be prepared to cost the UK economy up to £36bn by leaving the single market in order to cut immigration and take back control of the UK’s laws.
“About a third of the losses from single market withdrawal result from lost businesses in financial services,” the report says.
“The free movement of services can also be seen to directly touch on immigration if people are coming to the UK to offer their services as self-employed individuals or if firms exercise their mobility rights while wanting to carry their workforce over. A regime that practically tries to draw a distinction between labour and services is likely to encounter difficulties in sometimes distinguishing between a service provider and an employee.”
Nick Clegg, the former Liberal Democrat leader and deputy Prime Minister says the report shows the threat of leaving the single market, and would fail to deliver on Brexit secretary David Davis’ pledge to ensure Britain’s new deal has the exact same benefits as membership of the single market.
“Lost access to the single market could cost the UK economy between £25 and £36bn a year. Truly free trade is not just tariff-free; it reduces rules and red tape, something that is particularly important for services, which make up 80 per cent of our economy.
“Only being within the single market and customs union gives Britain full, unfettered trade access to all sectors in our biggest export market.
“Instead of pretending that we can have all the same benefits outside of the single market as in it, ministers must start dealing in reality rather than rhetoric.
“They could start by answering three basic questions. Do they accept that free trade means more than just abolishing tariffs? Will they admit that they cannot have frictionless access to the Single Market in services without abiding directly or indirectly to ECJ rulings?
“And, if it becomes apparent that there will be substantial damage to the economy from the restrictions on services trade, will they at least explore an alternative relationship, such as an EFTA-style one, with the EU?”