The UK services sector is a great British success story. Accounting for 80% of the UK’s GDP and four in five jobs across the country, the UK is the world’s second largest exporter of services. UK services are in demand all over the world, but the EU is the single largest destination for them – worth £90bn annually to the UK economy – with hundreds of thousands of jobs of companies and individuals benefitting from the services UK firms provide on both sides of the Channel.
As negotiations on the UK’s exit from the EU progress to the next phase, attention is turning to the real prize: the future relationship between the world’s fifth largest economy and the European Union. Getting the right deal for services trade will be critical to the success of this new relationship. But the trade in services is complex and will require an agreement of unprecedented depth to ensure trade between the UK and the EU remains as frictionless as possible.
While the future of the UK services trade is bright, the threat of the UK exiting the EU without an effective agreement is real. Under a “no services deal” scenario, companies in some of the UK’s most successful exporting sectors could lose the legal basis to export to the EU, leaving cross-border trade in disarray and hitting hundreds of thousands of contracts, jobs, customers and companies in the UK and the EU.
Action is needed quickly to avoid disruption for businesses and stop them from carrying out costly Brexit contingency plans that will create lasting damage to jobs and the wider UK economy. In the long-term, a smooth and open relationship will ensure consumers on both sides of the Channel can continue to access a variety of services, and employees of companies on both sides can continue providing them competitively.
Through consultation with its members of all sizes providing services of all kinds up and down the country, the CBI has established five steps that negotiators will need to take to secure a strong future for services businesses after Brexit.