Do three million UK jobs rely directly on our place in the EU?

“There are three million of our fellow citizens, men and women, in this country whose jobs rely directly on our participation and role and place in what is after all the world's largest borderless single market with 500 million consumers right on our doorstep... isolation costs jobs, costs growth, costs people's livelihood.” Nick Clegg, Today on BBC Radio Four, 31st October 2011 [from 6:28].
While last week's House of Commons vote on whether to hold a referendum on the UK's participation in the EU ended in defeat by 483 votes to 111, the debate is still ongoing regarding the perceived benefits and disadvantages of EU membership.
Deputy Prime Minister Nick Clegg's interview on BBC Radio Four's Today programme on Monday added more fuel to this fire, claiming that the jobs of three million UK citizens rely solely on the UK's current participation in the EU. Listeners might reasonably assume from this line of argument that these jobs would be lost if Britain were to withdraw from the EU.
Can we trust this figure? Full Fact finds reasons to be cautious.
Analysis
The number of around three million UK jobs dependent on the EU is a statistic which has oft been quoted by politicians in support of the UK's participation in the EU, as far back as 2000.
We thought it seemed a bit strange that current estimates were the same as those made ten years ago - not least because we have seen a significant recession hit in this time - so we did some further investigation.
The figure dates back to an initial report in 2000 by the South Bank University, which based job estimates on the UK exports trade with the EU, accounting for jobs produced as a direct result, and those produced indirectly by export-generated income.
This estimated a total of 3,445,000 jobs in the UK depend on exports to the EU, but failed to produce a net assessment including import trade.
Regardless of whether this is a net figure, any statistics based purely on trade with the EU do not offer a fair cost-benefit analysis of the impact of EU membership on the labour market, since the two are not necessarily directly correlated. Free trade agreements between the EU and non-EEC countries exist for some 10 countries in Europe and others elsewhere, including a Free Trade Agreement made with Switzerland in 1972.
A figure which depends entirely on UK exports with the EU does not necessarily show that UK withdrawal from the EU would dramatically alter this trade in a negative way.
Another report published in 2000 by the National Institute of Economic and Social Research concluded that “detailed estimates from input-output tables suggest that up to 3.2 million UK jobs are now associated directly with exports of goods and services to other EU countries.” However this report acknowledges that “there is no a priori reason to suppose that many of these [jobs], if any, would be lost permanently if Britain were to leave the EU.”
So is Nick Clegg basing his claim - also quoted in last year's Liberal Democrats manifesto - on these dated and more wide-ranging analyses?
When we contacted the Lib Dems to find out where this figure came from they said it had come from an analysis by the Department for Business, Innovation and Skills, which has been referenced in various Commons debates, including one in September this year about overseas investment. This analysis was apparently conducted in 2006 and estimated approximately 3.5 million UK jobs were dependent directly or indirectly on the export of goods and services to the EU.
Full Fact have been in contact with BIS to try to track down the report from which this figure is drawn, but the Department were only able to confirm that as far as they were aware there were no official reports published with this figure included. They are still trying to find possible analysis which could have been conducted.
As we have no access to where this figure came from, we cannot comment on the accuracy of how it was estimated. It is possible it is also based on the reports published in 2000.
What we can say, is that when the BIS figure is referenced in the Commons, the statistic still only refers to trade with the EU. Once again, this is not a reliable measure of what could be lost if Britain were to withdraw from the EU.
However when we contacted the Deputy Prime Minister's team at the Cabinet Office, they pointed us towards an entirely different source for the claim: a statistic put forward by the European Commission.
They were however unable to refer us to the exact report this corresponded to, instead saying we would be able to find it quoted in a number of different articles.
However this wasn't as straight forward as they suggested.
Full Fact found a BIS report from February this year, on the UK Government Response to the European Commission Consultation on the Single Market Act, which stated that “the single market has also contributed to increased growth of at least 1.85 per cent and the creation of 2.75 million new jobs across the EU since 1992.” This figure is also repeated in various government websites.
This seems to be the only statistic from the EC which is readily available regarding jobs created as a result of the EU. If this was the statistic to which Mr Clegg referred, which seems likely, he was wildly incorrect to use it in relation to UK jobs specifically, as it is the total created across EU nations.
What is the real figure?
We have contacted the EC to see if they are aware of any UK-specific estimates of the number jobs created as a consequence of EU membership, but we are waiting to hear back.
The most recent report Full Fact could find was conducted by Civitas in 2004. This provided an assessment of all the previous reports and concluded that “the economic impact of British withdrawal from the EU would be marginal—less than one per cent of GDP. Putting it another way, these three studies find that, for the UK, the net economic benefits of EU membership are at best marginal.”
Conclusion
Given this dearth of reliable information, we are left to choose between a dated estimate of jobs benefiting from EU-wide trade, but not necessarily dependent upon EU membership, and an EC estimate of jobs created across Europe, when looking at Mr Clegg's claim. Neither supports his assertion that three million jobs "rely directly" on the EU.
Update:
One reader has been in touch to point us towards this 2008 report by BIS's predecessor, the Department for Business, Enterprise and Regulatory Reform (BERR), as possibly the source the Lib Dems were referring to. This does find that:
"approximately 3 - 3.5 million British jobs are linked (both directly and indirectly) with exports to the EU."
While the numbers match up with Nick Clegg's, the rhetoric doesn't quite. The BERR report is explicit that it is dealing with all those jobs linked - directly or indirectly - with EU trade, while Nick Clegg is equally explicit in his claim that he is referring to only those jobs that are directly linked to EU membership.
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