Brexit and the UK’s Services Trade

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Publication Date October 2018
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The British services sector was the forgotten part of the Brexit landscape. It was being completely sold out by the Government focus on goods. But it was vital to Britain’s future prosperity since services exports had been rising at a much greater speed than those of goods. It made no sense for us to try to keep access to the single market in goods, where Europe had a huge surplus with Britain, but lock us out of the access to the single market for services, where Britain had a large surplus with Europe. The UK needed access to both.

Neither the so-called Chequers agreement nor the proposals of the more extreme Brexiteers, which relied on a system of mutual recognition to which the EU would never agree, could show a way to compensate for loss of the unique advantages of membership of the single market.

This was casting aside the interests of British business in sectors like financial services, where the UK was globally pre-eminent.

The report showed the economic impact of the exclusion from the single market just for services. Using the NIESR baseline, the author calculated that this would amount to £17 billion in lost revenue by 2030, or more than double Britain’s present contribution to the EU.

Many people would think that though the short-term impact of Brexit would be severe, the UK would swiftly recover. This analysis demonstrated that this was not the case. The pain would go on for a long time and would only be reduced by radical measures of de-regulation and cost saving to improve Britain’s competitive advantage with Europe, which run in precisely the opposite direction of the policies now advocated by both main political parties.

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Related Links
ESO: In Focus: Brexit - The United Kingdom and the European Union
ESO: In Focus, June-October 2018: Union and business leaders issue joint appeal for progress in Brexit negotiations / Brexit: time running out for answers to firms’ real-world questions, says BCC / 8 out of 10 businesses say Brexit hits investment as speed of talks outpaced by reality firms face on ground
United Kingdom: Department for Exiting the European Union: Policy Paper August 2018: Framework for the UK-EU partnership: Financial Services

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