There is "all the difference in the world" between access to the single market and membership of it, a think tank warns.

 

Britain will be worse off financially if it fails to negotiate full membership of the single market following the Brexit vote, according to a new report.

The Institute for Fiscal Studies has pointed out the difference between having membership of the trade bloc and settling for "access".
The think tank says that leaving the EU will free the UK from an estimated £8bn a year in budget contributions but warns that the loss of trade could hit tax receipts by a larger amount.
The EU accounts for 44% of British exports and 39% of service exports and even a host of new trade deals would be unlikely to make up for the loss of this, the IFS found.

However, full membership of the single market could add a potential 4% to the country's GDP, removing trade barriers such as licensing and other regulations that affect the supply of goods and services.
IFS research associate Ian Mitchell, said: "Membership is likely to offer significant economic benefits, particularly for trade in services."
On the other hand, the report said that access to the single market was "virtually meaningless", adding: "Any country in the WTO - from Afghanistan to Zimbabwe - has access to the EU as an export destination."
"Single market membership, by contrast, involves elimination of barriers to trade in a way that no existing trade deal, customs union or free trade area achieves.
"Membership may come at a cost of continuing to contribute to the EU budget and accepting future regulations designed in the EU.
 
"Those costs are salient and the benefits of membership are diffuse - but the financial benefits are real and, at the moment at least, likely to outweigh the financial costs."
Norway is a member of the European Economic Area - the single market -  without being a member of the EU but it must still make a financial contribution and accept most EU laws and free movement.
It is exempt from EU rules on agriculture, fisheries, justice and home affairs but it also has no say in how the rules of the single market are made.
Before the UK voted to leave the European Union, the IFS had warned that a leave vote would mean two more years of austerity and that lower growth and extra borrowing would add a £20bn to £40bn hole in the Government's finances by 2020.