21/08/2017 - Economists Fail To Reach Consensus Over EU Exit

GBP

Over the weekend a group of pro-Brexit economists said that removing all trade tariffs and barriers would help generate an annual £135bn uplift to the UK economy.

Patrick Minford, a lead author of a report from Economists for Free Trade, argued that a "hard" Brexit is "economically much superior to soft". He says eliminating tariffs, either within free trade deals or unilaterally, would deliver huge gains.

Minford later argues UK businesses and consumers would benefit from lower priced imported goods and the effects of increased competition, which would force firms to raise their productivity. The EU would then be under pressure to offer Britain a free trade deal, otherwise its producers would be competing in a UK market "flooded with less expensive goods from elsewhere"

Economist Monique Ebell from the National Institute of Social and Economic Research (NIESR) says Prof Minford "ignores decades of evidence on how trade actually works". Other economists say cutting barriers sets off a "race to the bottom".

The research conducted by Ms Ebell's showed that if the UK left the single market but made unilateral trade deals with major developing economies and the Anglosphere, it would only claw back about one-third of the 20-30% reduction in lost total trade by leaving the EU. This lead to campaigners against a hard Brexit saying the plan amounts to "economic suicide".

Labour MP Alison McGovern, a supporter of the cross-party group Open Britain, arguing for the UK to remain within the single market and the customs union, said the proposed strategy would be damaging to the UK economy. She said that "unilaterally scrapping our tariffs without achieving similar reductions in the tariff rates of other countries would see Britain swamped with imports, leaving our manufacturers and farmers unable to compete. Some foreign firms from outside the EU can produce more cheaply because they pollute, or treat workers in ways that we find unacceptable. So we impose tariffs to level the playing field. That is legitimate, and only fair."

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