What is the single market and what happens if we leave it?

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What is the single market - and what happens if we leave it?

(Picture: Getty)

Lawyers are currently in disagreement and a legal battle with the government over whether the UK remains in the single market after it leaves the EU.

But what is the single market?

The London skyline is silhouetted against a rising sun, as seen from Primrose hill, on November 29 2016.One good thing about the cold weather – it made London look pretty spectacular

Broadly speaking, a single market is an agreement made between participating states where most trade barriers have been removed.

The goal is that capital, labour, goods and services can move as easily between the participating states as they do within them. Barriers posed by borders, standards and taxes have been removed as far as possible.

Citizens are able to live, work, study, shop and retire in any participating state. They can enjoy a range of products from all members, and businesses can target more people.

The benefits of a single market membership include increased productivity, lower business costs and cheaper products.

(Picture: Getty)

(Picture: Getty)

Currently, almost half of all British exports go to the EU bloc. As a result, EU leaders have clearly expressed that it would be difficult for the UK to achieve both access to the single market and the Leave campaign’s restrictions on immigration.

This is because accessing the single market requires acceptance of all four freedoms – free movement of people as well as goods, services and capital.

The core concept of the single market revolves around the belief that these four freedoms will drive prosperity.

So what happens if we leave the single market?

It’s a very complicated situation because there are so many unknowns.

Smaller businesses would be allowed more freedom to thrive, and independent deals could be made with countries outside of the EU.

However, services could find themselves facing unfamiliar regulations, with the financial sector potentially losing the right to operate from a London base outside the UK.

A key area of uncertainty lies around whether the UK will be able to establish free trade deals.

Britain’s most successful era as an individual free trader was in the 19th century and it is unclear whether the economy can be successfully rethought.

However, according to Change Britain, the campaign focused around making a success of Britain’s departure from the EU, the single market could be accessed via a deal that obeys EU rules.

As a result, exporters could trade tariff-free with the EU and create separate deals with other parts of the world.

But what that means in practice is yet to be clearly defined.

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