Brexit: Could the UK leaving the customs union create jobs?

Written by Martin Banks on 6 January 2017 in News
News

Reports that the UK exiting could the EU's customs union could create 400,000 jobs have been dismissed. 

Geert Vanden Wijngaert/AP/Press Association Images

Reports that the UK exiting could the EU's customs union could create 400,000 jobs have been dismissed | Photo credit: Press Association


A senior Labour MP has dismissed reports that 400,000 jobs could be created if the UK withdraws from the EU's customs union.

Analysis by the Change Britain campaign group suggests that hard Brexit, where Britain leaves both the single market and the customs union, could ultimately be beneficial for the UK, citing reports that the US, India, the South American Mercosur group, China, Canada and South Korea have all expressed an interest in trade deals. 

Agreements with these countries would create almost a quarter of a million jobs, it said. That figure could rise to just under 400,000 if deals were struck with Japan and the ASEAN group of states, which includes Thailand, Indonesia and Malaysia, the group's analysis said.


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But, speaking on Tuesday, Barry Gardiner, Labour's shadow secretary of state for international trade, dismissed the report.

He said, "This report from Change Britain is pure diversion. They are attempting, yet again, to mask Brexit as an exercise in pursuing free trade while calling for us to leave the largest free trade area in the world. 

"The economic cost and the sheer volume of jobs at risk in the immediate aftermath of a withdrawal from the customs union has been ignored while celebrating jobs which may or may not be created in the future.

"The government stated in 2014 that 3.3 million jobs in the UK were directly tied to trade with the EU. The loss of that trade could see a substantial number of those jobs lost. 

"Furthermore, trade agreements can take a long time to conclude, even in the simplest of cases. It is not enough for the Tories to promise that jobs may be created in the future: they need to address now how jobs and trade will not be lost in the present."

Further comment came from Jonathan Portes, professor of economics and senior fellow at the thinktank UK in a Changing Europe, who called the report's figures "entirely fictional statistics" and said they did not take into account possible risks of leaving the customs union.

"Successful free trade deals would increase both exports and imports," he said. "Calculating, as Change Britain does, a speculative figure for the number of jobs created by additional exports while ignoring the jobs lost as a result of additional imports is either deeply ignorant or deliberately misleading."

Simon Tilford, the deputy director of the Centre for European Reform thinktank, said Change Britain "seem to assume that leaving the deepest and biggest customs union and free trade agreement in the world, the EU, with which we do half of our trade, will not have any negative economic implications and will not cost employment - that's an unserious proposition."

However, the Change Britain founding supporter and former CBI director-general, Lord Jones of Birmingham, said, "The UK has a rich history as a great trading nation. It is therefore no surprise that a number of major economies have already expressed an interest in striking free trade agreements with us.

"The only way we can make the most of these huge opportunities is to leave the EU's customs union and take back control of our trade policy. 

"This will create hundreds of thousands of new jobs in a range of industries right across the UK. We can then take our place as one of the global champions of free trade."

 

About the author

Martin Banks is a senior reporter for the Parliament Magazine

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