Pro-Europe arguments that claim millions of jobs are reliant on membership of the union are highly inaccurate. In fact, Europe will be begging for a trade deal with Britain if it was to leave the union, because it would benefit members more than UK.
Ahead of the in/out vote on Britain’s place in Europe, experts at London-based Capital Economics have blasted claims trade would suffer if the UK were not a part of the EU.
They studied how exports would be affected in the event of a Brexit and found Britain would likely be able to negotiate a free trade deal with Europe outside of membership because it would be beneficial to both sides.
But even in the worst-case scenario, and there was no such agreement, the tariffs and any other additional costs of trading with Europe could be absorbed by Britain.
Vicky Redwood, chief economist at Capital Economics and report author, said: “The killer fact surely has to be that other countries, such as the US, manage to export successfully to the EU despite also facing these barriers.”
Overall around 50 per cent of UK exports go to Europe, and this makes-up just 14 per cent of the overall UK economy, according to official figures.
With the exception of Germany, the UK is a more important market for the biggest EU economies than they are for the UK.It means it would be in the interest of the majority of Europe, as well as Britain, to continue with a free trade agreement.
Any cost on trade as a result of being outside of Europe would also be offset by the savings and opportunities and savings on offer as a result.
For instance, the UK currently needs to apply EU regulations to the whole of the economy, even though only 14 per cent of its GDP is exported to the EU.
UK businesses would also be able to exploit the world’s fasting growing export markets by negotiating its own trade deals.
Being in the Single Market does not even seem to have given Britain that much of an advantage in exporting to the rest of the EU, compared with countries who are outside.
Ms Redwood said: “Claims that millions of jobs are reliant on membership of the EU are highly misleading, as they assume that all of the UK’s trade with the EU would vanish if the UK left the EU.
“In fact, we think that trade with Europe could end up relatively unaffected.”
She added: “After all, there have been three key developments in recent years that would soften the blow.
“First, as part of a world-wide move towards lower trade barriers, the EU’s common external tariff has fallen to a manageable 4 per cent. Some sectors would be hit by much higher tariffs, but the UK Government would be able to compensate them, using the savings from its contributions to the EU budget.
“Secondly, manufacturing has fallen significantly as a share of the UK economy – and European tariffs would apply only to goods, not services.
“And third, Europe’s importance to the UK economy has diminished. The main export growth for the UK in recent years has not come from the EU, or is it likely to in the future.”