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Economies trading with the EU under WTO rules have done better than the UK

  • British export growth to Single Market founder members has been slower than that of non-members with no free trade deal
  • UK exports to non-members has also been growing faster than to fellow members of the Single Market since 1993

Economies that trade with the EU on World Trade Organization (WTO) terms have increased their exports to the Single Market five times faster than the UK over the past two decades, a new Civitas analysis shows.

Major economies with a free trade agreement with the EU have experienced a 135 per cent average rise in goods exports to the 11 founder members of the Single Market (excluding Britain) since 1993.

The UK’s export growth to the same countries during this period has been just 25 per cent.

The findings, by analyst Michael Burrage in a new report published today (Thursday 23rd March), undermine claims that leaving the Single Market without a trade deal in place will be damaging to UK exporters.

As Theresa May prepares to embark on negotiations over Britain’s future relationship with the EU, the findings lend weight to her position that ‘no deal for Britain is better than a bad deal’.

In It’s Quite OK to Walk Away, Burrage demonstrates how the supposed benefits of membership of the EU have been ‘largely imaginary’ with little if any empirical evidence to support them.

Over the 23 years of the Single Market, UK annual goods export growth to Single Market countries has been 1 per cent, which is comfortably exceeded by those trading in every other kind of relationship, under WTO rules (1.93 per cent), as EU members (2.28 per cent), under bilateral agreements (3.58 per cent) and as EEA members (3.91 per cent).

On the key question of whether Single Market membership has boosted British trade, he shows how UK exports have in fact grown faster to 111 countries with which it trades under WTO rules (at a compound annual growth rate of 2.88 per cent from 1993-2015) than to the 14 other earlier members of the Single Market (at 0.91 per cent).

At the same time, those nations that trade with the EU under WTO rules have seen their exports grow faster than have exports between fellow members of the Single Market.

Ranked among the top 40 fastest-growing larger exporters of goods to the EU from 1993 to 2015, the UK is 36th.

The report also finds:

  • No evidence that Single Market membership has had a positive impact on UK GDP or productivity growth. Three measures of productivity growth, as measured by GDP per capita, GDP per person employed and GDP per capita versus the US, do not give any indication that EU or Single Market membership has helped solve the UK’s chronic productivity problem, or done much to help other members;
  • The EU’s external trade agreements have been little benefit to the UK, being mainly with small or micro partner countries. By 2014 they still only covered 6.1 per cent of its goods exports and 1.8 per cent of its services exports.
  • The claim that the EU is good for jobs is undermined by the distinctively high and severe unemployment record among its members compared with other leading OECD economies. Unemployment in the 12 founder members of the Single Market has been nearly double that of other non-EU OECD countries since 1993, while long-term unemployment, as a percentage of unemployment, for 15 to 24 year olds has been more than three times higher.

Burrage writes: “The evidence shows that the disadvantages of non-membership of the EU and Single Market have been vastly exaggerated and that the supposed benefits of membership, whether for exports of goods and services, for productivity, for world-wide trade, or for employment, are largely imaginary.

“The Government appears to have decided to leave the Single Market on the basis that we should return full control of UK laws to the UK, but trade data also offers strong support for the decision, and provides comfort for those worried about relying on WTO rules if no deal emerges.

“The benefits of EU and Single Market membership have been illusory, while its costs are real, onerous, and unacceptable to a majority of the British people.”

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