The governor of the Bank of England said yesterday that the leave campaign is in denial about the impact Brexit would have on the UK economy. Today Vote Leave are also guilty of deception.
Their most recent claim – that the single market doesn’t work for Britain – is one of the weakest political arguments I have ever seen. Knowing that they are losing the argument, Vote Leave are resorting to make-believe.
They claim that the EU isn’t working for British exporters. But this is based on highly selective and misleading use of statistics.
In fact, ONS data shows that the UK’s total exports to the EU grew 44 per cent between 2004 and 2014, the most recent decade for which data are available. That was an increase in value of almost £70bn – greater than the value increase to the whole of Asia combined.
This is greater value growth than to any individual country, and more than all major regions such as to the whole of Asia or the Americas, North and South.
Similarly, ONS figures for the 15-year period 1999-2014 show a 73 per cent increase in total UK-EU exports, with goods exports increasing by 43 per cent. This is particularly impressive considering that the financial crisis happened during this period. In the past year, as the TUC recently highlighted, exports to the EU have increased in importance as growth in emerging market economies has slowed.
It is true that UK trade with the rest of the world, not the EU, has been growing as a proportion of our overall trade, but this only undermines Vote Leave’s central claim that we must leave to trade more with non-EU countries.
The fact remains that the EU is the UK’s main trading partner, and that fact is unlikely to change, in or out of the EU. Almost half of our goods exports go to the EU. If Britain leaves, this trade would be under threat as new trade barriers – whether tariffs or regulations – would be imposed.
And what would the impact of that be? Why not listen to experts, rather than Vote Leave’s back-of-the-fag-packet figures? Both the IMF and the Bank of England have said that leaving the EU could send our economy into recession. And those hit hardest would be working families on low and modest incomes – as was the case in the last recession, from which we are only just recovering.
No wonder every major trade union is calling for a vote to remain. And PricewaterhouseCoopers has also shown that almost a million jobs could be lost in the event of a vote to leave. The Treasury has shown that families could be worse off to the tune of £4,300 and public services could be hit by £36bn in cuts; £250bn of UK trade and £200bn in investment would be at risk.
The reason is that the EU’s single market is the world’s largest free trade area and the best economic relationship Britain can have with Europe. It allows us to trade without tariffs right across the continent, gives us a say over the rules of doing business and gives us full access to service sectors that are so vital for the UK economy. Our home market increases from 65 million consumers to 500 million and British firms can do business in Berlin under the same rules as in Brighton.
This is vital to the livelihoods of millions of workers employed in exporting sectors, and every other worker, taxpayer and public service user who depends on the trade revenues, GDP growth and tax revenues they generate.
No alternative to membership of the single market is remotely as good for Britain. The other countries in Europe are not going to give Britain a better deal than the one they have, because it is not in their interests to do so. It would be like allowing a former member of a club to use the facilities without paying the membership fee or sticking to the rules, a deal not available to actual members.
If we leave the EU, our home market will shrink from 500 million consumers to 65 million, we will be cut off from certain sectors and we won’t have a say over the rules of doing business across Europe, leaving all the power in the hands of our European competitors. Even if we negotiate a trade deal like Canada’s, it will take many years to achieve and will be inferior to our current arrangement, involving tariffs on some goods and barriers to service trade.
The uncertainty while the deal is negotiated will hit our economy hard – costing jobs, driving up prices and making it harder to fund our public services. Leaving the single market is simply not a risk worth taking.
Rachel Reeves, MP, is a member of the Treasury select committee