One of the key issues at hand in this referendum is UK — EU trade. As members of the European Union we are in something called the European Single Market; this enables us to trade with businesses in European countries as though they were here in the UK. It also enables consumers to have a broader range of options to choose from regarding the services they wish to purchase — being able to access the entire market throughout the EU.
What we hear from both campaigns is a rhetoric of “they need us more than we need them” or “we need them more than they need us” — in reality when one looks at the IMF’s 2014 figures as a percentage of trade, we are the market for 6.6% of the rest of the EU’s (EU27) exports, whilst the EU27 are the market for just over 50% of our exports. This would appear to give a pretty one-sided view that we need the EU more than they need us.
This would be an overly simplistic view to take of the situation; whilst 51.4% is over half of what we export, 6.6% is over a twentieth of what the EU27 exports — that is still quite a sizeable amount when one considers that there are nearly 200 non-EU countries and territories.
When we look at trade between the UK and the EU as plain amounts of money, the UK runs what is called a trade deficit with the EU27 — that is to say that we buy £23.9bn more from them than they buy from us according to the Office for National Statistics in May 2016. According to the Centre for European Reform, over half of this is down to the UK’s trade with the Netherlands and Germany. So that means that less than £12bn of this trade deficit is from the other 25 EU countries — some of them even buy more from us than we do them, so the situation with some countries is the opposite! This highlights the fact that ultimately the UK and the EU need each other when it comes to trade.
The main issue with predicting our trading relationship with the EU post-leave is that something like this has never happened before — no fully sovereign state has ever left the EU before. Greenland, a dependency of Denmark (similar to the Falklands and the UK) left the EU in 1985 but Denmark remains a member.
What we can definitely conclude is that there most likely will be some form of amicable trading relationship should the UK vote to leave in June. There are several different relationships which could come about depending on the outcome of post-leave negotiations; these are all outlined here.