‘That’s completely wrong’: Michael Gove falsely claims EU has no single market for services

Future for services sector will be ‘way worse’ after Brexit, trade experts warns – after top Conservative claims it will ‘flourish’

Trade experts have criticised Michael Gove after he wrongly claimed there is no single market for services in the EU and argued companies will “flourish” after Brexit.

The Cabinet Office minister was accused of getting his facts wrong after branding the EU “bureaucratic” and as holding back firms in the crucial services sector – which makes up 80 per cent of the UK’s economy.

“That’s completely wrong. There is a single market in services, although it is not complete,” Professor Alan Winters of the UK Trade Policy Observatory at the University of Sussex told The Independent.

On the future for services outside the EU, he added: “It’s going to be way worse. It looks as if there is very little that is being seriously negotiated on services.”

Sam Lowe, of the Centre for European Reform think tank, echoed the verdict, saying: “The single market in services is not as developed as the single market in goods, but it very much does exist.”

The criticism comes after Ivan Rogers, a former UK ambassador in Brussels, warned the services industry was likely to be sacrificed in a “quick and dirty” trade deal with the EU.

Around 45 per cent of UK exports are in services, in areas such as banking, insurance, legal services and the creative industries, which have all prospered through EU membership.

Mr Gove dismissed that criticism, telling the BBC: “At the moment, we do not have a single market in services, even within the European Union.”

He insisted a deal with “no tariffs, no quotas, no quantitative restrictions” was up for grabs, adding: “There is a bright future for services outside the European Union.

“It’s the case that we can actually innovate. Our advantages as a services economy can be leveraged outside the European Union.”

But Professor Winters said the Organisation for Economic Cooperation and Development had calculated the EU internal market allowed services to be traded with only 25 per cent of typical regulatory barriers.

Outside the EU, UK companies would face those significant extra barriers to exports, on the evidence of recent trade agreements struck by Brussels.

“We know that when the EU makes trade deals with third countries – as with Canada, South Korea and Japan – they offer much less on services than the internal market provides,” he warned.

And on Mr Gove’s claim of “a bright future” trading outside the EU, he added: “Other than countries facing sanctions, there is nothing that the EU says that would create any barriers to trade in services in other countries.”

Garry Young, director of forecasting at the National Institute of Economic and Social Research, warned the “level playing field for member states” would be lost with Brexit.

“Outside the EU we might be able to relax some of the rules but if we do, we would not be able to trade those services with the EU in the same way as now,” he said. “That would be a big cost for the UK.”