A report produced by the Centre for Economics and Business Research (CEBR) for Open Britain, a group that is against the UK leaving the EU, states that when the UK leaves the single market, its IT and telecoms sectors would be hit, causing the GDP to plunge 1.4 per cent, or £25 billion.
In the worst-case scenario, the losses could increase to £36 billion, or a 2 per cent loss in the GDP. If Britain negotiates a free trade agreement just for goods and not services, the UK’s IT sector would lose up to 15 per cent in exports.
The tech sector would also be the biggest loser out of the six service sectors as it would experience losses between £2.6 billion and £5.2 billion annually.
However, the CEBR clarified that a lot of IT and telecoms services are unregulated, and therefore these services would most probably continue without any hassle.
The CEBR pointed out that the report focused more on the IT sector than any other services sector, and it required raw data on the free movement of IT workers to give an accurate forecast.
Free movement chaos
The free movement of services is integrally linked to the free movement of workers. Self-employed individuals and organisations may come to the UK to offer their services.
This can pose a problem when there is a distinction between services and labour as it will be hard to distinguish who is a service provider and who is an employee.
The CEBR predicted that the problem could get out of hand in the future, considering that many individuals are opting for self-employment in the UK.
It concluded that leaving the single market economy would have an adverse impact on the IT sector, which is renowned for its cutting-edge IT support and services.