The US Chamber of Commerce warned that post-Brexit Britain would need “unfettered access” to the European single market to maintain US companies’ investment in the UK economy.
The group, which represents US companies with $590 billion (£487 billion) invested in the UK, warned the government that continental Europe will become a comparitively more attractive place to do business, according to a report in the Financial Times.
“Ultimately, these costs are likely to be borne by British workers and consumers,” the chamber said. “Already some US businesses have indicated that, without continued seamless free market access to Europe, investment and hiring decisions likely would favour other locations,” the group said, according to the FT report.
The US Chamber of Commerce also said that claims the UK would be unaffected by any tariffs levied on goods and services by Europe on its goods and services were “nonsense.”
“This is nonsense,” the Chamber said. “In the real world of business, margins for tradeable goods are razor thin, and even a so-called ‘nuisance’ tariff of 3% can make or break a sale.”
The letter is similar to the warning from the Japanese government soon after the June referendum. The Japanese government warned that the UK’s inclusion in the European single market for goods and services was essential to maintain investment.
“There are numerous Japanese businesses operating in Europe, which have created 440,000 jobs. A considerable number of these firms are concentrated in the UK. Nearly half of Japanese direct investment intended for the EU in 2015 flowed to the UK … we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses,” the Japanese letter said.
Britain risks losing its financial passport rights to offer and sell services in the European Union without restrictions. Many US investment banks use their base in London to passport into the single market of 28 EU member states.
Prime Minister Theresa May’s government has raised the possibility of a so-called Hard Brexit, which prioritises control over immigration, as opposed to maintaining some economic links in return for concessions on freedom of movement. The Times reported that it would will cost the UK £66 billion ($81.2 billion) a year in lost tax revenues.