No Deal is better than what we have now. Nigel Farage’s reminder is timely: exiting the European Union without an agreement in case of MPs voting down Theresa May’s Chequers-minus-minus deal is not a problem.
Economists For Free Trade have explained. But have enough people been listening?
It is now critical that every MP turn to the EFFT’s analysis and understand that it is not the problem we are led to fear. Because it is not leaving without a deal. It is leaving with a World Trade Deal.
Edgar Miller of Economists For Free Trade explained this all with crystal clarity more than a year ago here. This article needs reading again given the grotesquely cynical ramping up of Project Fear we have been treated to recently – a scaremongering operation that Michael St George has described as ‘born out of the Treasury’s pre-Referendum antipathy to Brexit . . . against a No-Deal Brexit as an alternative to Chequers, as part of a deliberate “Chequers or Chaos” strategy’.
The reason people still fall for it, as Miller argued before, is because we have been tied up in the EU for such a long time; which is why most UK politicians, commentators and voters really have no idea of the role the WTO performs, let alone what trading as an independent body of this organisation actually means in practice. That’s the problem. Ignorance.
Yet the EFFT analysis shows that far from the horizon looking gloomy on March 29, 2019 if Mrs May fails to secure her dreadful Chequers-minus deal (and we hope that she does fail), it looks rather bright.
Nor is it that complicated. ‘Initially’, Miller explains, ‘we would adopt the EU’s Most-Favoured-Nation (MFN) tariff schedules (as the Government has already said it will) which will apply to the EU as well. It will then be for the UK to decide whether to reduce those tariffs, including the possibility of getting rid of them altogether. It will be the choice of the UK to decide what level of tariffs it sets against the EU and consequently the rest of the world.’
This, he says, will be the single decision that decides whether the UK will prosper or not in this new trading environment.
Nor need we worry if we removed tariffs against the EU (and the rest of the world), and if the EU (and the rest of the world) does not reciprocate. A standard world trade model shows that unilaterally removing tariffs creates a long-term GDP gain of 4 per cent, a fall of 8 per cent in consumer prices, and an increase in Treasury revenue of more than 7 per cent, compared with the status quo.
Which clearly is a rather better situation than we have today.
The sort of problems that the Treasury and the Civil Service are currently hyperventilating over would occur only if we engage in a ‘tit for tat’ tariff policy against the EU. Yes, this would disrupt manufacturing supply chains severely and that, of course, is the scenario the Treasury and others have used in Project Fear to discredit the ‘WTO option’. But it is not necessary to play such games.
Last month Economists For Free Trade published their most recent thinking about the UK leaving without a trade deal, or a World Trade Deal as they describe it. Their analysis has not changed.
Even if we impose tariffs on the EU, they are going to be the losers Big Time – not us. What we should be worrying about is not the non-existent WTO ‘cliff edge’ but rather the looming BRINO life sentence. This ‘would lock the UK into current EU arrangements for an indeterminate number of years, preventing the UK from embracing worldwide free trade and putting in place new pro-growth regulations [prolonging] the ability of unskilled workers from the poorer countries of the EU to enter the UK labour market freely with full access to taxpayer-funded benefits, inhibiting our ability to attract the best and brightest from non-EU countries’.
By the EFFT’s calculations it could lose the UK 7 per cent of GDP – or around 0.5 per cent growth per annum over the next decade and a half.
That would be the real disaster.