Who will lose out when we leave the single market? Civitas admit it would be the UK

24 Oct 2016, by Owen Tudor in International

Today, pro-Brexit think tank Civitas has released a report saying that the EU will lose out from the increases in trade tariffs likely to result from Brexit. Even from the campaign that brought you £350m a week to spend on the NHS, this is a quite remarkably bad argument. As their own figures show, the main losers will be Britain – at least twice as badly as the nearest EU loser, which Civitas say is Germany. We may come back to the issue in more depth, but here are three reasons their conclusions are misleading.

First, they confuse the EU with a country

I know that Brexiteers think the EU is a socialist super-state, but it simply isn’t, it’s an alliance of 28 (soon 27) member states. Saying that Britain will ‘only’ lose £5.2bn in tariff costs while the EU will lose £13.9bn only makes sense if you think the UK and the EU are the same sort of body, and we aren’t. No other country in the EU – on Civitas’ own figures – will lose out by as much as Britain, with Germany the largest loser at £3.4bn. So, even on their own figures, Britain would lose out most.

Second, they take no account of scale

The main reason the above error is so important is that the UK has a far smaller economy than the EU, if you tot it all up. To look at the impact another way, look at how much the tariff impact is per person. In the UK, the tariff costs work out at £86 per person. In Germany, it’s just £42 per person, or less than half the loss. And across the entire EU, the per person tariff cost – according to Civitas’ own figures – is just £31 per person. So, even on their own figures, British citizens would lose out at least twice as much as even the next biggest losers.

Third, they’re only talking manufacturing tariffs

Civitas’ figures apply to the impact of leaving the single market on tariffs on manufacturing goods. But Britain’s main exports these days are services, and those aren’t even covered by the WTO, so services wouldn’t just face tariff barriers, and would be far harder hit. And tariffs are only one part of the problem: as well as paying duty on exports, British manufacturers would have to comply with all sorts of regulatory barriers, like paperwork that manufacturers tell us could be twice or more the burden of tariffs. Once again, Britain would lose out far more than any other EU country.

Conclusion

So, without even questioning how accurate Civitas’ figures are, it’s clear that the conclusion they reach is utterly misleading. Even on their own figures, Britain would be the big loser from leaving the EU single market.