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 Programme, 31 October 2011 [from 6:28].

The Deputy Prime Minister Nick Clegg's claims 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.

South Bank University

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.

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.

National Institute of Economic and Social Research

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?

Department for Business, Innovation and Skills

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 2011 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.

One reader was 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.

European Commission

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.

But they were 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 straightforward 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."

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 (25 February 2014)

The government has confirmed the source of the estimate that 3.5 million jobs are dependent on EU membership in answer to a parliamentary question in the House of Lords. It said:

"The estimate of 3.5 million jobs linked to trade with the European Union is based on the assumption that the share of UK employment linked to trade with the EU is equal to the share of total UK value added (GDP) generated in the production of goods and services exported to the EU.

"The calculation uses data from UK Input-Output tables to estimate the proportion of UK value-added content generated in exports of goods and services and applies this to the values of UK exports to the EU. This is then divided by total UK GDP and the resultant proportion then applied to the total UK labour force to estimate the proportion of the labour force linked to EU exports on a value-added basis."

Again, this doesn't show these jobs are dependent on the UK's membership of the EU, to such an extent that leaving it would cost this many jobs.