Mayor warns that leaving Single Market would damage London and the UK
- Leaving Single Market could result in tens of thousands fewer jobs by 2030
- Single Market vital to sectors including financial services, technology, life sciences, professional services and insurance.
Leaving the European Single Market would damage London and the UK ‘for decades to come’, resulting in tens of thousands fewer jobs, the Mayor of London, Sadiq Khan will warn tonight.
Speaking to business leaders at an event hosted by London First, the Mayor will say that while the national debate on Brexit has focused heavily on the Customs Union, it is the UK’s membership of the Single Market which has enabled London to become Europe’s capital for financial, professional and legal services, as well as for technology.
Even if a Customs Union arrangement is agreed as part of a Brexit deal, the Mayor believes the UK’s national competitiveness will be damaged permanently if the country does not remain part of Europe’s Single Market.
Sadiq believes that the lack of firm proposals on how to protect services – which account for nearly 80 per cent of the UK economy and 92 per cent of London’s economy - is a major failure of the Government’s approach to the Brexit negotiations.
In 2016, London’s service exports totalled £117.3 billion, with the capital accounting for nearly half of the UK’s total export of services. London’s largest exporting sectors were in financial services, travel services, real estate, and the professional, scientific and technical activities sector.
Independent research published by the Mayor last year* revealed that leaving the Single Market and the Customs Union could lead to a lost decade – or even longer - of significantly lower growth, with the country potentially having 500,000 fewer jobs if it crashes out without a deal on 29 March and nearly £50bn less investment by 2030 than would otherwise have been the case. In London alone, there could be as many as 87,000 fewer jobs and the capital’s economic output could be two per cent lower by 2030 than predicted under the status quo.
Leaving the Single Market while remaining in the Customs Union would still mean around 300,000 fewer jobs in the UK and £30bn less investment by 2030. In London, there could be up to 54,000 fewer jobs and the capital’s economic output could be 1.2 per cent lower by 2030.
The Mayor believes that the Government must immediately withdraw Article 50 to avert the threat of the UK leaving the EU with no deal on 29 March. This would allow time for a public vote to be held so the country can decide what course it wants to take.
The Mayor of London, Sadiq Khan, said: “London is a world leader in finance, law, professional services, the creative industries and technology – and these industries are central to the future prospects of the British jobs and growth.
“So it’s hugely problematic that the Brexit debate in Parliament is largely ignoring the needs of these sectors, focusing almost entirely on manufacturing.
“If we want to protect jobs and competitiveness in our key growth sectors, in an era of intensifying global competition, membership of Europe’s Single Market is the best way to do so.
“If the Government fails to achieve that, it is a decision that London and the UK will regret for decades to come.
“I am asking the Government to recognise that Britain benefits vastly from London’s status as Europe’s business capital – and to act accordingly.
“Ultimately, whatever deal the Government does should be put to the public, alongside the option of staying in the European Union. But it’s clear that any Brexit deal on the table should set out to protect jobs and growth.”
Being outside the Single Market would have significant consequences for British-based service and technology-based firms, limiting the services they could legally provide to European clients and customers, as well as the transfer and holding of data.
For financial services, leaving the Single Market would mean additional requirements and costs and limitations on the ability of a business to trade with companies inside the Single Market.
The digital sector is primarily services: 96 per cent of sector output and 81 per cent of sector exports are spread across services activities. Leaving the Single Market would also mean leaving the Digital Single Market, which was only set up in 2015 to help remove barriers to cross-border e-commerce and access to online content while increasing consumer protection. This could hit cybersecurity, data protection/e-privacy, and the fairness and transparency of online platforms.
For life sciences, the UK accounts for approximately 25 per cent of the EU market. Leaving the Single Market would impact on how medicines are authorised and marketed across the continent.
The European Medicines Agency has already left the capital, resulting in the loss of hundreds of highly skilled London-based jobs.
With the risk of clinical trials becoming more costly, slower authorisation of new medicine and medical devices, and less favourable intellectual property rights Britain now risks the loss of significant further investment and talent.
Jasmine Whitbread, chief executive of business campaign group London First said: “Access to the single market has helped cement London’s reputation as a global powerhouse.
“But continued uncertainty and the growing prospect of crashing out of the EU without a deal is denting growth and casting a cloud over the wider economy. It’s time to stop the clock, revoke Article 50 and safeguard people’s jobs. And, if the Government can’t come up with a solution that can command parliamentary support, then the decision must go back to the people.”
NOTES TO EDITORS:
To access the report by Cambridge Econometrics, visit www.london.gov.uk/brexit-analysis