UK and the EU: Trade and economy
The stats and facts
Putting a figure on the overall economic impact of leaving the EU is difficult and contentious and involves assumptions about the trade agreements, immigration and regulation policies that would be adopted. Independent think-tank Open Europe says Brexit could make the economy smaller or larger depending on decisions in those key areas.
Trade is important for Britain because about 28% of what we produce is sold abroad, exported. And we benefit from importing too, which we do even more. Estimates of how many jobs are supported by exports to EU countries vary, but they are typically of the order of three million or more. This is not, however, the same as saying they depend on the UK being an EU member.
When goods and services are sold across borders they can face barriers including tariffs (taxes applied only to imports), limits on the amount, and standards that are different from those in the seller's home market. They don't mean you can't trade, but it makes it more costly.
In the EU's single market tariffs have been eliminated and so have many other barriers (though not completely), so it is relatively easy for British business to sell goods and services around the EU. The EU also has trade agreements with a number of other countries which eliminate or reduce many of these barriers.
Foreign investment is important to the UK. Britain has the third largest amount of foreign investment (after the US and China).
Regulation, wherever it comes from, and the cost of complying with it is a perennial concern for business. Open Europe estimates the cost to the UK of meeting the 100 most hard to meet EU regulations was £33bn a year.
What does the EU do?
The EU is in charge on trade policy. Trade negotiations with non-EU countries are conducted by the European Commission on the basis of a negotiating mandate from the member countries' trade ministers. For imports from outside the EU, there is a "Common External Tariff". Member states do not set their own tariffs.
There are EU rules that affect business in a number of areas including consumer protection, product specifications, and health and safety.
The EU also has investment agreements with other countries (some of them are combined with the trade agreements) that are intended to create a favourable environment for foreign investors.
…and what doesn't it do?
The EU does not take decisions about specific trade contracts. So member states' governments and businesses decide themselves where to buy goods and services - though there may be rules on competition that are relevant in some cases. Nor does it decide where companies invest.
UK opt-outs to EU rules?
Britain (unlike most EU countries) has a right not to adopt the euro currency.
The argument for leaving the EU
Trade with the EU is a declining share of Britain's total as other economies grow faster, and we would be free to negotiate trade deals of our own. In addition, the EU would have an incentive to allow British exporters full access to its market because it sells more to us than vice versa. Business could be freed from much unnecessary and costly regulation. Decisions on where to invest are based on many factors other than membership of the EU.
The argument for staying in the EU
We can negotiate trade and investment deals more effectively as part of a larger economic bloc. The terms under which Britain would have access to the EU from outside are unknown. It's possible that Britain would in effect have to contribute to EU spending and adopt many EU business rules to gain full access to the market. Foreign businesses would be less likely to invest in Britain if it didn't ensure full access to the EU market.