This is part of a series of guest posts written exclusively for Cicero Elections by the main campaign groups on both sides of the EU referendum debate.
Staying in the Europe is vital for our economic success. The EU accounts for over half of our trade, and our membership of the single market is worth £500 billion to the British economy every year.
The EU ensures a level playing field for British exporters and European institutions prevent other countries, such as France, from indulging their protectionist instincts. European law allows UK firms to establish operations in other EU states without having to go through the bureaucracy involved in setting up formal subsidiaries there. And, crucially, the EU “passporting” system allows British financial services to be sold across the continent.
The single market’s principle of free movement of labour allows our businesses to recruit from a workforce of more than 500 million people. This has allowed them to find the people they need to employ to be successful in an increasingly globalised economy, while the Prime Minister’s new settlement has ensured that EU migrants cannot get full access to our welfare system until they have paid into it.
Through the EU, we have trade agreements with over 80 countries, and make use of its bargaining power in negotiations with major global powers including the United States, India and China. Because we are part of the world’s largest trading bloc, our clout is hugely enhanced. If we tried to negotiate those trade deals on our own, we would have to do so from a vastly weaker position.
Brexit campaigners claim that even if we left the EU we could retain these benefits, but that, as Peter Sutherland, the former head of the World Trade Organisation, has said, is “magical thinking.” The process for leaving the EU is designed to put the leaving state at a disadvantage. If we voted to leave we would have just two years to re-negotiate all our trade agreements, including the most important one — with the EU that we had just spurned.
Out campaigners do not allow evidence to undermine their confidence. They assert that because we sell more to them than they sell to us, the remaining EU member states would have a strong incentive to cooperate, but this is a serious mistake. What matters to the rest of the EU is not how much they sell compared to the total size of our trade, but how much they sell compared to the total size of theirs. While the rest of the EU accounts for half of our trade, we only account for around a sixth of theirs. Our negotiating position would be extremely weak and any deal we could negotiate is likely to be much worse than the one we have now.
That has serious long-term consequences for our economic future. All reputable economic studies show that in politically realistic conditions, leaving would raise major barriers to our trade with the rest of the EU and that those barriers would permanently reduce the output of the British economy. That means less investment, fewer jobs and fewer opportunities for British businesses.
Even in the short term, Brexit campaigners admit that leaving would cause a severe “economic shock”. The extent to which that shock would fade depends very much on the kind of relationship they hope the UK would have with the rest of the EU, but this is something on which out campaigners vehemently disagree. Some would like to arrange a deal like Norway’s or Switzerland’s: but that would mean accepting free movement and EU regulations. Others would prefer not to negotiate any kind of deal at all, even though that would allow tariffs to be imposed on our exports to the EU. They have no clear idea of what Britain’s economic relationships would be like if we left.
It is not surprising therefore that a majority of members of credible business organisations, support a vote to remain. Leaving would produce a major economic shock, followed by years of uncertainty and risks permanent damage to the UK economy. That is a risk we cannot afford to take.
Charlotte Vere is Executive Director of Conservatives IN. For more information visit www.conservatives.in.