By Tom Brake, leading supporter of Open Britain
Civitas is a Eurosceptic think tank, and it is hardly surprising therefore that they should seek to convince us that the UK holds all the cards in forthcoming negotiations with the EU and that all will be well when we leave.
Today, they have a new report out, which purports to show that the EU would have more to lose than Britain from a post-Brexit trade war. They say that if Britain traded with the EU under World Trade Organisation (WTO) rules our companies would face a yearly bill of £5.2bn a year in tariffs to the EU; but EU firms would face a similar bill of £12.9bn on their exports to us. Therefore, the EU would have more to lose than Britain, so we will never have to face WTO tariffs on our exports to the EU. Right?
Wrong. Firstly, this shows that each country’s tariff bill is less than our £5.2bn – and omits to add that the EU buys 44% of everything we sell whereas we buy 8% of everything the EU sells, so a higher proportion of UK trade would face new tariffs.
However, the main problem with this research is that it looks at goods only and doesn’t take in to account our trade in services. The UK ran a trade deficit of £67.8 billion with the EU (3.6% of GDP) in 2015. This was comprised of a deficit in goods of £88.7 billion (4.8% of GDP), but a surplus in services of £20.9 billion (1.1% of GDP). Our service sector is critical to the health of our economy – services account for 80% of total employment, over 25 million people – and this is where non-tariff barriers will be toughest to overcome. We will have to continue to meet EU regulations, but with us outside the room these will be set to meet the competitive interests of the EU, not the UK. Warnings over the weekend from the British Bankers’ Association underline this.
The truth is, with the UK alone negotiating with the world’s largest free trade area, the balance of power does not lie in our favour. 3.1% of the rest of the EU’s GDP is dependent on exporting to the UK, compared to 12.6% of the UK’s GDP dependent on EU-UK trade.
All the evidence shows that the best way to prevent greater damage to our economy is to keep Britain in the Single Market. The worst possible scenario for jobs, growth and economic stability would be a Hard Brexit that would create destructive new barriers to trade.
Civitas have form for suggesting the EU has more to lose than we do in the upcoming negotiations. Last month they unveiled research showing that 3.2 million British jobs depend on exports to the EU, while 5.8 million EU jobs depend on exports to the UK. But the population of the other 27 countries is a great deal bigger than the population of Britain. So in fact, Civitas showed that only 3.05% of EU jobs depend on trade with Britain, while a whopping 11.45% – that’s more than one in every 10 – of British jobs depend on trade with the EU.
Why does it matter if a think tank is selective in the statistics it highlights to support its case? It matters because Civitas is effectively the research arm of Vote Leave. A great investigation by the Independent found that there was a revolving door, with Civitas staff moving in and out of a network of right-wing think tanks dominated by Vote Leave campaigners. They even share the same office as Business for Britain, which acted as the embryonic Leave campaign. Now these groups, like Civitas, Change Britain and Brexit Central, have gone from fighting for Brexit to fighting for a Hard Brexit. This would wrench Britain out of the Single Market, out of the Customs Union, out of the closest possible relationship with our biggest trading partner by far. They want to persuade voters that this wouldn’t be so bad.
One of the most depressing things about the referendum campaign was the success of Vote Leave’s campaign of lies – Turkey joining the EU, the £350 million a week, and so on. We can’t let it succeed again. So we need to campaign for a Brexit deal that respects the will of the British people while keeping us in the Single Market.