The decades following World War II experienced an explosion of global trade. The annual growth rate of global exports averaged 8 percent in the 1950s, 9 percent in the 1960s, and 20 percent in the 1970s (World Trade Organization). During this boom of global trade, the volume of UK exports grew in absolute terms. However, up until the mid-1970s, the UK trade growth lagged behind the global average. After that period, UK trade growth met and often exceeded the global average. This shift, not coincidentally, occurred when the United Kingdom (UK) joined the world’s largest customs union, the European Union (EU).
The UK joined the EU on January 1, 1973. In the preceding twenty years (1953-73), the UK exports growth rate was, on average, over 30 percent below the global average. However, in the twenty-five years following EU accession (1973-97), the UK matched the pace of rapid global trade growth, with much of the “catch-up” occurring in the decade after the UK joined the EU.
By joining the EU, the UK gained access greater trade opportunities with other EU members. In the decade following accession, UK trade with other EU members rose by 19 percent annually (European Commission’s Directorate General for Economic and Financial Affairs). Additionally, being in the EU has increased UK access to non-EU markets because the EU has negotiated trade agreements with non-EU countries around the world. As a large customs union, the EU has more leverage in trade deals than the UK negotiating on its own. There are ongoing EU negotiations with dozens of countries, such as the United States, Canada, and Japan.
In two weeks, the UK will vote on whether they are to remain a member of the EU. The EU has provided the UK with greater export opportunities, and this fact – along with the income and jobs tied to these exports – should be considered before Britons vote on June 23.
Also, check out our latest publication, “To Brexit or to Bremain: That is the Question“, by Campos and Coricelli.