LONDON: Britain’s service sector will see its exports drop up to 60 per cent after leaving the European single market, even with a free-trade agreement with the EU in place, according to research from a leading think-tank.
A new study from the National Institute of Economic and Social Research, to be published on Wednesday, says that signing a free-trade agreement with the EU will not recoup any loss in services exports, but would reduce the long-term fall in goods exports from between 58-65 per cent to between 35-44 per cent. Advocates of the UK leaving the single market say that signing FTAs would enable British exporters to access markets in the EU and the rest of the world.
The study was based on the average FTA in existence in rich economies and big emerging markets, while Theresa May, the prime minister, has said Britain is aiming for a unique deal with the EU. In theory, the falls in exports could be reduced if Britain managed to sign a deep bilateral agreement with the EU, including good coverage of the services sector. But Monique Ebell, the author of the report, said: “The average FTA for services at the moment is not very comprehensive and tends not to do very much.”
In 2014, 40 per cent of Britain’s services trade, and 56 per cent of its goods trade, was with other European Economic Area members, meaning that the overall fall in British exports would be 24 per cent for services and 20-25 per cent for goods. Britain’s post-Brexit trade arrangements have come sharply into focus over the past few days after the government scrambled to reassure Nissan, which manufactures cars in Sunderland, that its ability to export to Europe would not be affected by leaving the EU.
