When it comes to trade we often hear the claim that the European Union needs the United Kingdom more than vice versa. But is this a fact or just plain rhetoric?
Based on facts and figures, this claim is doubtful. The UK relies massively on the trade with the EU. Although prominent leave supporters will often point out that EU 27 countries export more to the UK, then the UK is exporting to the EU, this deficit doesn’t mean the EU has a greater reliance doesn’t on UK exports than vice-versa.
This is because the economies of the EU27 are considerably larger than that of the UK, being worth approximately £14.6 Trillion annually. By contrast, the total size of the UK economy is £2.2 Trillion. Trade between EU countries and the UK accounts only for about 8% of the EUs total exports, whereas 44.5% of our exports go to the EU. The EU would without a doubt be negatively impacted by any reductions in trade that will inevitably occur in the event that we leave the single market and customs union, but nowhere near to the same extent as we would be.
Before we contemplate this significant downgrade in our current relationship with our biggest trading partner, I think it is important to ask what we stand to gain in return. We often hear that exiting the single market and customs will present us with a unique opportunity strengthen economic ties with countries outside the bloc, such as the United States, China, and India.
I’m all in favour of increasing our exports to these places. But it is worth pointing out that we do not need a hard Brexit to accomplish this. In fact, in the event of a hard Brexit, we will lose access to the trade agreements that we have with non-EU countries as part of our current EU membership.
In 2017, International Trade Secretary Liam Fox pledged that agreements with the relevant countries to roll over these trade deals would be “ready for one second after midnight in March 2019”. Needless to say, this hasn’t happened. As of the 28th March, the government had only signed 8 out of 40 roll over agreements for these trade deals. This raises the very real prospect that a no deal Brexit will actually be a significant setback for our attempts to increase our trade with the rest of the world.
Furthermore, it is perfectly possible to increase our exports to countries outside the EU without exiting the single market or customs union. Indeed, Germany, an EU member, exports £44 Billion more to the USA than it imports. The UK, with a trade surplus with the US of £12 Billion, doesn’t even come close to this.
Keeping these facts in mind, I see no contradiction between maintaining our close economic ties with our European friends and neighbours and increasing our trade with countries further afield. It is perfectly possible to achieve both goals at the same time. This is a big part of the reason why I believe that a ‘soft Brexit’ is far preferable to the unnecessary damage that would be caused by a damaging break from both the single market and customs union. This view will continue to guide how I vote as we look to resolve the current parliamentary impasse in the coming months.