UK losing its ‘security blanket’ by leaving Single Market

Last week, British Prime Minister Theresa May gave the clearest indication yet that Britain will leave the Single Market when it leaves EU membership.

Whatever happens, we must all come away from Brexit with a solution that works for all parties — voters, business and government. If the U.K. is leaving the Single Market then it needs to be clear what the next best alternative is.

The Single Market was designed to make trade and investment easy — free movement of goods, services, people and capital with one rule book. Trade and investment thrive in environments with minimal red tape, open borders and maximum freedom.

For first time exporters, the Single Market is a perfect environment to cut their teeth before branching out into more challenging trade markets, like Africa or the Middle East.

The countries in the Single Market are familiar, the rules and standards are the same and costs and risks are relatively low. For a small company operating in a supply chain, they can ship goods easily to be assembled in a different country for the final product to be exported to a distant market.

For a foreign investor, a company invests once, in one system, not 27. No other region in the world offers anything close to this level of integration.

The Single Market is not perfect, but it is the closest thing we have to an ideal trade environment at a regional level.

If you trade along the Silk Road through Belarus, Russia, Kazakhstan and China, you will soon find out that life is full of opportunities, but not so easy. The same goes for Africa — the fastest growing continent on the planet.

The U.K.’s vision for global free trade is uplifting and welcome, but this is little help on a practical level. Leaving the Single Market will almost certainly remove some of the comfort blanket of the EU for first time exporters and likely change the business model for some supply chains unless the U.K. government has a clever solution on tariffs.

Don’t be fooled into believing the numbers are irrelevant either. It is highly competitive out there.

A 2-3 percent increase in tariffs or trade costs could be the difference between success or going bust for a small company.

It could also be the difference between a company attracting foreign investment to build a new plant or having that investment going elsewhere. Jobs and livelihoods rely on both.

Now the government needs to set about how it is going to help make the rest the world as easy to trade in as the Single Market. 

Chris Southworth is the secretary general for the International Chamber of Commerce’s United Kingdom chapter. 

The views of contributors are their own and not the views of The Hill.