- It is highly uncertain what the UK’s future would look like outside the European Union
(EU), which makes ‘Brexit’ a leap into the unknown. This report reviews the advantages
and drawbacks of the most likely options.
- After Brexit, the EU would continue to be the world’s largest market and the UK’s
biggest trading partner. A key question is what would happen to the three million EU
citizens living in the UK and the two million UK citizens living in the EU?
- There are economic benefits from European integration, but obtaining these benefits
comes at the political cost of giving up some sovereignty. Inside or outside the EU, this
trade-off is inescapable.
- One option is ‘doing a Norway’ and joining the European Economic Area. This would
minimise the trade costs of Brexit, but it would mean paying about 83% as much into the
EU budget as the UK currently does. It would also require keeping current EU regulations
(without having a seat at the table when the rules are decided).
- Another option is ‘doing a Switzerland’ and negotiating bilateral deals with the EU.
Switzerland still faces regulation without representation and pays about 40% as much as
the UK to be part of the single market in goods. But the Swiss have no agreement with
the EU on free trade in services, an area where the UK is a major exporter.
- A further option is going it alone as a member of the World Trade Organization. This
would give the UK more sovereignty at the price of less trade and a bigger fall in income,
even if the UK were to abolish tariffs completely.
- Brexit would allow the UK to negotiate its own trade deals with non-EU countries. But as
a small country, the UK would have less bargaining power than the EU. Canada’s trade
deals with the United States show that losing this bargaining power could be costly for
- To make an informed decision on the merits of leaving the EU, voters need to know more
about what the UK government would do following Brexit.
- This is the first in a series of briefings analysing the economic costs and benefits of Brexit
for the UK.
Written by By Project staff
About Me And EU
This project aims to create a one-stop-shop to encourage young voters in the UK to engage in EU affairs by creating an understanding of how Europe influences their daily lives and by connecting them to other young people interested to talk and share ideas on the referendum.