IFS Says Full EU Membership Essential For UK To See Benefits
An economic research body in the UK called the Institute For Fiscal Studies (IFS) has said that having access to the single market is useless until the UK could commit to the free movement of people and the removal tariffs and customs checks.
The institute estimates that continuing to have single market membership would result in an additional 4 percent boost to the country’s GDP but losing it could hurt Britain's public finances significantly.
In a statement, Institute of Fiscal Studies said,
If the UK were able to join the European Economic Area (EEA), we would enjoy near-full membership of the Single Market but likely be obliged to accept EU regulations and free movement of people. Obtaining membership of the Single Market without meeting these conditions would be unprecedented
After the Brexit vote, Leave camp politicians like Boris Johnson had said that Britain would be able to trade freely and retain access to the single market even outside the EU. This view has not found support within the EU with key European leaders saying that UK cannot enjoy benefits without adhering to membership requirements.
Britain is yet to initiate talks with the EU on its relationship but the issue of single market access will be a key component of the negotiations. The IFS has suggested that other than joining EEA, the UK had the option to enter into an agreement similar to a free trade agreement (FTA) which would reduce or remove trade barriers. But the institute added that such deals were rare and would still less advantageous than having full membership.
The new Prime Minister Theresa May has been open to the idea of retaining single market access. Last month she said that the priority in Brexit negotiations was that British companies be allowed to trade within the single market while having more control over movement of people. There have been suggestions that May should pursue a soft Brexit policy where the country retains single market access with some level of limited freedom in the movement of people.
Banks and financial companies based in the UK have an EU passport that allows them to operate freely throughout the European region from their base of operations. The country’s financial hub located in the city of London has emphasized that single market access was vital for it to continue its operations. The Bank of England has plans to implement a number of new measures to lift growth in the country.
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