The British services sector is the forgotten part of the Brexit landscape. It is being completely sold out by the Government focus on goods. But it is vital to Britain’s future prosperity since our services exports have been rising at a much greater speed than those of goods. It makes no sense for us to try to keep access to the single market in goods, where Europe has a huge surplus with Britain, but lock us out of the access to the single market for services, where Britain has a large surplus with Europe. We need access to both.
Neither the so-called Chequers agreement nor the proposals of the more extreme Brexiteers, which rely on a system of mutual recognition to which the EU will never agree, can show a way to compensate for loss of the unique advantages of membership of the single market.
This is casting aside the interests of British business in sectors like financial services, where we are globally pre-eminent.
The report shows the economic impact of the exclusion from the single market just for services. Using the NIESR baseline, we calculate that this will amount to £17 billion in lost revenue by 2030, or more than double Britain’s present contribution to the EU.
Many people may think that though the short-term impact of Brexit will be severe, we will swiftly recover. This analysis demonstrates that this is not the case. The pain will go on for a long time and will 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.