IFS Warns of Economic Loss If UK Leaves EU without New Trade Deal

The cost to the UK of leaving the European Union without negotiating a replacement trade deal has been highlighted in a new report. 
The Institute for Fiscal Studies (IFS) said that if the UK failed to negotiate any new trade arrangements, the cost could be the equivalent of 4% of economic output. 
The UK voted to leave the EU in the June referendum. 
However, the government has yet to start negotiating the UK's departure. 
"While leaving the EU will free the UK from having to make a budgetary contribution, loss of trade could depress tax receipts by a larger amount," the (BBC) reported citing the IFS report. 
Ian Mitchell, IFS research associate and co-author of the report, said: "From an economic point of view we still face some very big choices indeed in terms of our future relationship with the EU." "There is all the difference in the world between 'access to' and 'membership of' the single market. Membership is likely to offer significant economic benefits, particularly for trade in services," Mitchell added. 
The report argued that the special advantage of being an EU member was that its single market reduced or eliminated barriers to trading in services - such as the need for licences or other regulations. 
The IFS said that the absence of trade barriers for services was far more important than removing tariffs on the trade in goods between EU members, such as customs checks and import taxes. 
With the EU taking 40% of all the UK's services exports last year, the report said they would be particularly vulnerable if the government were unable or unwilling to negotiate a replacement deal and become a member of the European Economic Area (EEA), like Norway. 
The IFS added that financial services, which generate 8% of the UK's economic output, might suffer in particular if a final Brexit deal meant they lost their so-called "passporting rights" that allows them to be sold directly to EU customers and businesses. 
"To maintain these rights would likely require membership of the European Economic Area (EEA)," it said.