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Will 3 million jobs be lost if we quit EU?

by Sam Ashworth-Hayes | 15.03.2016

The Sun has blasted David Cameron for claiming that 3 million jobs would be lost if we quit the EU, branding this “nonsense”. Iain Duncan Smith made a similar criticism the day after the prime minister made a keynote speech last week.

If Cameron had said Brexit would lead to the loss of 3 million jobs, he would have been wrong.

But there is no mention of this in the prime minister’s speech. As it is, it’s the Sun and Duncan Smith that erred.

3 million jobs linked to our EU trade

While Duncan Smith grumbled about the “almost biblical” doomsayers in the Remain camp, Cameron’s actual line was fairly upbeat: “So many businesses succeed… because of this free-trade system. Indeed, 3 million people’s jobs in our country are already linked to it”.

The claim that lots of jobs are “linked to” trade with the EU is not the same as saying these jobs would go up in smoke if we quit. While the second claim is false, the first (what Cameron actually said) is true.

The 3 million figure has been floating about in various forms since the turn of the millennium. Most recently, a 2014 report from the Centre for Economics and Business Research estimated 3.1 million jobs were linked to trade with the EU.

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Reports on this topic use similar methods, stripping out the value of imported components from UK exports to the EU and using the average productivity of workers in those industries to estimate employment associated with exports. Employment in the supply chain is added. Finally, all these jobs generate income, some of which is spent. That, in turn, supports more jobs.

Linked to, not dependent on

Pro-Europeans have sometimes said that 3 million jobs would disappear in the event of Brexit. They were wrong. Even under the worst-case scenario, trade with the continent wouldn’t stop altogether. Moreover, the UK would adapt; exporters would find other markets, and production for the domestic market would rise. As the economist Jonathan Portes puts it: “There is unlikely to be any significant long-run impact” of Brexit on employment, although “a reduction in trade may well feed through to a reduction in real wages”.

If today’s Remain camp was saying 3 million jobs would go on Brexit, The Sun and Duncan Smith would be right to lambast them. As it is, Cameron and other campaigners have been fairly disciplined in how they use the figure. It’s their critics who are misleading the electorate.

The Sun and Duncan Smith did not respond to queries about where they believed this claim to have been made.

Edited by Hugo Dixon

2 Responses to “Will 3 million jobs be lost if we quit EU?”

  • Excellent article. Jobs will not disappear overnight.

    Jonathan Portes thinks that there may be a slight reduction in wages in the longer run. How does this square with Lord Rose’s dire predictions that Brexit will mean that wages rise? (Wouldn’t that be truly dreadful).

    By the way, when will David Cameron visit the steel workers and tell them how much safer their jobs are in the EU?

  • It’s the same kind of comment as the Leave campaign’s £350M UK gross contribution. They want listeners to register the figure in their minds even if they subsequently qualify the claim or admit that the net figure is lower.

    Although Cameron never actually says “3 million jobs will be lost if we leave the EU”, that’s the impression he wants to give by quoting that figure rather than an estimate of how many jobs might *actually* be at risk.