This site contains government information on the EU referendum. No material was published on this website between 27 May and 23 June 2016, in line with the restrictions set out in the Political Parties, Elections and Referendums Act 2000.

Trade

The EU referendum takes place on the 23rd June. On this page you'll find some frequently asked questions on the UK's trade with the EU and other countries around the world along with the Government's answers to these questions.

Would leaving the EU really harm UK trade?

Yes. The EU is by far the UK’s biggest trading partner – in 2014, the UK exported £229 billion of goods and services to other EU Member States, which is 44% of our exports – more than twice what we export to the US, for example. Also, 53% of the goods and services we purchased from overseas in 2014 came from the EU.

At the moment, our full access to the EU’s Single Market through EU membership makes it easy for UK firms to export goods and services to the EU. If we were to leave, there is no guarantee that we would be able to replicate our current level of access.

Doesn’t the EU need us more than we need them?

No. A much higher proportion of UK exports go to the EU than EU exports come to the UK. The EU is the destination of 44% of the UK’s goods and services exports, but the UK is the destination of only 8% of the EU’s exports.

As a result, EU exports to the UK are worth 3% of EU GDP, while UK exports to the EU are worth 13% of UK GDP – four times more. Also, almost half of all of our foreign investment comes from the EU.

What does the EU Single Market do?

The Single Market works by treating the EU’s Member States as a single economic area. It means that UK businesses can trade goods and services with 500 million consumers across the world’s broadest and deepest economy without tariffs. As one of the biggest countries in the EU, we have a leading voice in shaping this market and protecting British businesses’ and consumers’ interests.

Wouldn’t the UK be better focusing on making its own trade deals with the emerging markets of the world, like China, India and Brazil?

Being a member of the EU means that the UK already has good and growing access to emerging and other markets through the EU’s extensive range of free trade deals. As an EU member, we are part of a far bigger, more powerful trading area and a stronger economic bloc in negotiations than the UK would be alone. So we don’t have to choose between trading with the EU and trading with emerging markets, we can do both. For example, UK exports of goods to China more than doubled between 2010 and 2015.

Would leaving the EU cut the regulatory burden on British business?

Over 110,000 businesses in the UK export goods to the EU and around 150,000 businesses import goods from the EU. All of them could face more paperwork, more bureaucracy and possibly new tariffs when trading with the EU if we were to leave. Many more businesses benefit indirectly from trade with the EU through supply chain links. The Government estimates that over 3 million jobs are linked to trade with the EU.

The UK has a very competitive regulatory framework, and international benchmarks place the UK’s regulatory environment among the best performing advanced economies.

Evidence from the Organisation for Economic Co-operation and Development (OECD) on product market regulation shows that the UK has the least restrictive regulatory regime in the G7 and is second only to the Netherlands across the OECD.

The UK Government has made minimising the impact of regulation – whether EU or UK – a consistent priority, particularly for small and medium-sized enterprises (SMEs).

Many EU requirements, such as those on safety standards, are standards that we would need in place anyway. So leaving the EU will not mean that all these requirements are scrapped in the UK. If the UK left the EU but UK businesses wanted to continue to trade with the EU, then UK businesses would still have to meet EU requirements without having any influence over those rules.

Doesn’t EU regulation hinder small and medium sized businesses?

Being part of the Single Market means that any UK small and medium sized business (SME) that wants to export to the EU, or import from it, faces less paperwork and less bureaucracy when trading with the EU. The EU has taken positive steps to reduce the burden of regulation on small and medium sized businesses (SMEs). Between January 2012 and December 2015, ‘adaptations’ for SMEs have been identified in around 40 per cent of relevant EU proposals where a potential SME impact was identified.

As part of the UK’s new settlement with the EU, the European Commission committed to review the burden of regulation each year, looking in particular at cutting red tape for small businesses. For the first time ever, specific targets to reduce costs for businesses will be introduced in the most burdensome sectors. And the European Commission has reformed its approach to regulation, reducing the number of new initiatives proposed in its annual work programmes by over 80 per cent since 2014.

I have heard that leaving the EU could cost me £4,300 a year, is that true?

Yes, HM Treasury analysis has estimated that leaving the EU for a negotiated bilateral agreement would imply a long-term loss of GDP of £4,300 a year for each household in the UK after 15 years, relative to what would happen if the UK stayed in the EU.

Can we have full access to the Single Market without being part of it?

No. Full access to the Single Market means accepting other obligations as well – like the free movement of people. Every country that gets significant access to the Single Market has had to accept these other obligations – like Norway, and Switzerland.

It would be possible for the UK to agree a Free Trade Agreement with the EU. Such a deal could provide for considerable access for goods being sold in EU markets. But even if the UK agreed a deal that was as good as the most advanced free trade deal in the world, it would still not provide full access to the Single Market – and would therefore risk damaging UK companies. UK exports and imports would need to go through customs procedures and meet customs requirements if we left the EU’s customs union, which is one part of the Single Market. Our services companies – which make up 80% of the UK’s economy – would not be able to operate as freely across the other 27 EU economies.

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