Losing single market access 'far more damaging' to UK than remaining EU countries, study claims

Theresa May is aiming to begin negotiations over a future trade deal with the EU
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Tom Powell19 December 2017
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Losing access to the European single market will be far more damaging to the UK than the remaining EU countries, a new study has found.

Researchers claimed the UK is almost five times more exposed to the negative effects from trade disruption caused by Brexit than the EU.

This puts Britain in "a very weak bargaining position" as talks on the future relationship get under way, according to the team from the University of Birmingham.

The researchers said their findings show it is "not correct" to argue, as some Brexit-backers do, that Britain's trade deficit with the rest of the EU gives it an advantage in negotiations, because the remaining 27 nations have more to lose in terms of exports.

Their analysis of trade relationships found a "very different" picture, under which the loss of access to the single market and customs union is "far more damaging" to the UK than the EU27.

The research found that "all UK regions are systematically more vulnerable to Brexit than regions in any other country", with trade-related risk exposure ranging from almost 17 per cent of GDP in parts of the North to 10 per cent in London.

Overall, the results show that 2.64% of EU GDP is at risk because of Brexit trade-related consequences. In the UK, Brexit trade-related risks account for 12.2% of UK GDP, said the report.

"The UK and its regions are far more vulnerable to trade-related risks of Brexit than other EU member states and their regions," said the report by the University's 's City Region Economic and Development Institute (City-Redi), published in academic journal Papers in Regional Science.

"As such, the UK is far more dependent on a relatively seamless and comprehensive free trade deal than the other EU member states.

"Mercantilist arguments popular in the UK media, which posit that the UK trade deficit with the rest of Europe implies that on economic grounds other EU member states will be eager to agree a free trade deal with the UK, are not correct.

"The UK's exposure to Brexit is some 4.6 times greater than that of the rest of other EU as a whole, and the UK regions are far more exposed to Brexit risks than regions in other EU countries, except for those in Ireland.

"As such, in all likelihood the potential impacts of either no deal between the UK and the EU or a bad deal, whereby the UK's access to the single market and the customs union is heavily curtailed, are far more damaging for the UK than for the rest of the EU."

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