EU referendum: Philip Hammond warns of ‘chilling effect’ on economy if UK votes to leave

Almost half of British exports go to the EU

A yes vote in the EU referendum would lead to “very significant uncertainty” for years for UK businesses that could have a “chilling effect” on the economy, according to Philip Hammond, the foreign secretary.

Hammond made the comments during an MP debate on Europe on Thursday. 

He warned that if Britain votes to leave the EU “the mood of goodwill towards Britain will evaporate in an instant”.

European politicians would have “no desire at all” to show that Britain can prosper outside the EU, he added.

But how much does Britain rely on the EU?

Almost half of British exports go to the EU, according to date from the Office of National Statistics.

In December, that proportion slipped to 38 per cent. But over the past 18 months it has ranged from 38 per cent to 49 per cent. 

The proportion of total imports from the EU is 55 per cent in December 2015. Over the same period, this has ranged between 49 per cent and 55 per cent.

Chart: Statista

If the UK left the EU, it’s likely the UK would negotiate access to the single market, so it doesn’t lose its biggest trading partner.

Part of that negotiation is likely to include playing by the same rules as the rest of the EU. But by leaving, the UK would no longer have a say in what those rules are and how they are set.

Rajesh Agrawal is the founder and CEO of RationalFX, an online brokering company, who also advises Sadiq Khan MP, Labour’s candidate for London mayor. He said that EU membership is the best way to give the City of London a voice in Europe.

“Britain could of course go it alone, do things our way, tell the Eurocrats where to go. But rather than regaining sovereignty, the truth is we’d end up with less ability to pursue our interests,” Agrawal said.

In the debate on Thursday, David Cameron said jobs would be at risk if Britain voted to leave the EU, noting that three million UK jobs are linked with the EU.

This three million figure 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 GDP generated in the production of goods and services exported to the EU.

But it is not the estimate of the number of jobs dependent on the EU’s membership. The Government once admitted this in response to a Freedom of Information request, telling Open Europe that the figure was “not an estimate of the impact of EU membership on employment”.