One table that shows how stupid Brexit is
In our previous blog we summarised a report looking at the effect of Brexit on Scottish businesses.
One of the key issues in that report was the fear many businesses have about the impact of Brexit on the trade of goods and services.
The government have over 50 reports looking at the impact of Brexit but they refuse to let the public know about them. They say that this is because releasing the data might jeopardise the negotiations. However, it is likely that these reports are being kept secret because they would cause mass consternation among the public if released.
Thankfully, there are other sources of information. This year the World Bank looked at the impact of different Brexit scenarios on UK trade with the EU.
From the chart below we can see that even in a soft Brexit scenario UK trade to the EU is dramatically damaged.
However, anyone who has been following the Brexit talks and the internal wranglings within the Tory party will probably have given up on this best-case scenario.
There seems to be a strong possibility of no deal at all. In fact, senior Tory party members are actively putting pressure on the government to just walk away from the talks. As you can see from the table below, a No-Deal scenario is likely to half trade to the EU, with the service industry taking the biggest hit.
Worryingly, the World Bank report suggests that a No deal scenario would reduce UK GDP by over 7 percent.
Most people should be worried that the Tories are constantly repeating the phrase,
no deal is better than a bad deal,
as it sounds like they are setting us up for that scenario, which will result in a devastating impact on or exports to the EU.
Even the most fundamental Brexiteers, who believe in Brexit for ideological, not financial reasons, must pause for thought at these figures?
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In the “Norway” scenario, we assume that the UK bargains an agreement with the EU as deep as the EEA,
which covers 36 policy areas. This agreement would allow the UK to be part of the European Single Market and to retain the “four freedoms”: free movement of goods, capital, services and people. In addition, the UK would have to comply with competition and state aid rules and horizontal areas related to the four freedoms without being able to influence them.
The “average PTA” scenario assumes an agreement between the UK and the EU with a depth equal to the
average depth of EU’s agreements with non‐member countries. By looking at the agreements that the EU
signed in the past, we would expect the new agreement to include around 14 provisions. Agreements with this depth guarantee market access for goods and, to some extent, services but do not usually go beyond areas that are not covered by the WTO (i.e. WTO‐X areas) other than competition policy and investment.
In the “no‐agreement” scenario, the UK and the EU do not sign any preferential agreement. In this case
the variable depth would drop to zero, meaning that areas such as investment, competition policy and
movements of capital (just to name key ones) would no longer be regulated by the agreement and the UK
would have to pay Most Favored Nation (MFN) tariffs to access the EU market.