Leaving the single market

12 October 2016
What was claimed

The Treasury forecast that dropping out of the European single market will cost the economy £66 billion and reduce GDP by 7.5%.

Our verdict

This is confusing estimates for GDP with estimates for tax revenue. The Treasury does expect GDP to be 7.5% lower than it otherwise would have been after 15 years, if the UK relies on World Trade Organisation rules outside of the single market. But the £66 billion figure is for the resulting loss to public finances, not the economy, and it's the upper limit - £52 billion is the Treasury's best estimate.

“The Treasury forecast [for leaving to the European single market] is a £66 billion loss to the economy [and] 7.5% of the GDP.”

Jeremy Corbyn, 12 October 2016

This appears to be confusing the Treasury’s estimate for the size of the UK economy (GDP) with its estimate for lost tax revenue, should the UK drop out of the single market.

In April 2016, the Treasury estimated that after 15 years UK GDP could be between 5.4% and 9.5% smaller than it otherwise would have been, if the UK pursues trade outside of the single market and relied only on its membership of the World Trade Organisation. Picking the middle of the top and bottom estimate, that’s UK GDP 7.5% smaller than it would have been.

As a consequence of lower GDP, it estimated that after 15 years the government would collect between £38 billion and £66 billion less tax revenue than it would have done, so £52 billion on average.

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