Europe

UK risks economic blow outside EU - Open Europe study

UK Prime Minister David Cameron in Brussels, 20 Mar 15 Image copyright EPA
Image caption David Cameron faces a tough diplomatic fight to get major reforms enshrined in the EU

Leaving the EU could cost the UK economy 2.2% of total output (GDP) by 2030, a study by the think-tank Open Europe says.

That would be the worst-case "Brexit" scenario, the study concludes. But GDP could rise by 1.6% if the UK negotiated a free trade deal with Europe and pursued "very ambitious deregulation".

Open Europe backs the UK Conservatives' call for far-reaching reform of the EU.

A UK in/out referendum on EU membership might take place by the end of 2017.

UK Prime Minister David Cameron has promised such a referendum if the Conservatives win the 7 May general election. He plans to argue the case for staying in, provided he can get key reforms adopted in the EU, including stricter rules on EU migrants' rights.

There is great reluctance in the EU however to embark on more treaty change - and that could be an obstacle for Mr Cameron's reform ambitions.

'Global trade rules'

The UK Independence Party (UKIP), campaigning for a "Brexit", dismissed Open Europe's calculations, saying the report "ignores facts and distorts significant issues".

UKIP trade spokesman William Dartmouth said fears of greater EU protectionism hurting the UK in the event of a Brexit were unfounded.

"Trade relations between the UK and the EU would be governed by World Trade Organization rules and rules set by global standards-setting forums," he argued.

A 2.2% loss of GDP would be equivalent to the UK economy losing about £56bn ($83bn) annually. That could happen if the UK withdrew, failed to strike a trade deal with the rest of the EU and did not pursue a free trade agenda, Open Europe argued.

The study offers what it calls two "more realistic" scenarios for a Brexit, in which GDP could either fall by 0.8% or rise by 0.6%.

Open Europe says the 28-nation EU remains the UK's most important single export market, although the share of exports to the rest of the world has grown in the past decade. In 2013, the UK exported 44.5% of its goods and services to the EU, compared to nearly 53% in 2003.

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