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A new report by a prestigious polling firm says that a so-called ‘No-Deal’ WTO-style Brexit will cost one EU country €5.5 billion over the next two years, as opposed to a Brexit with a trade agreement where losses for that country would likely total €1.5 billion over the next two years.
That country is the Republic of Ireland.
“A hard Brexit could cost the Irish economy more than €5.5 billion over the next two years, a government-commissioned report has said.
A “soft” Brexit including a transition arrangement would cost less than €1.5 billion over the period, highlighting the importance to Ireland of the UK’s withdrawal talks with the EU.
The study by Copenhagen Economics, which examined four possible scenarios, also warns that the UK will probably take at least five years to implement new trade agreements, complicating Irish efforts at contingency planning.
[Ireland’s ‘Taoiseach’ which is the official title of the Irish Prime Minister] Leo Varadkar said last night that a comprehensive free-trade deal with the UK would be the best way to avoid a hard border. After a meeting with Theresa May, the UK prime minister, he said: “We both prefer [the option] by which we can avoid a hard border in Ireland, and that is through a comprehensive free trade and customs arrangement.
“That is the best way we can avoid any new barriers — north and south, and also east and west.”” — The Times
Other EU Nations Would Take a Hit in the ‘No-Deal’ Scenario
We can extrapolate that other EU countries would also take an economic hit in a ‘No-Deal’ scenario, but due to their much larger economies when compared to Ireland, such losses would amount to tens or even hundreds of billions over the same two-year period. Just think of all those German cars that wouldn’t be sold in the UK due to the higher tariffs that would automatically be imposed on EU countries in a ‘No-Deal’ Brexit!
Almost every country in the world uses WTO rules as the foundation of their trading relationship with other countries (but important to note) those same countries also diligently pursue bilateral trade deals with their important trading partners that allow both sides to legally sidestep the more costly WTO tariff ruleset in favour of something that works better for both partners. (And that trading relationship/tariff structure can be anything the two sides want in regards to any trade that happens between them)
So if country A and country B decide they want to trade, they’re completely free to build a better tariff structure than the comparatively expensive WTO ruleset, and that agreement will thenceforth supercede the WTO tariff structure. However, it only applies on trade between those two countries — the rest of their trade with the world would still be conducted under the auspices of the WTO.
It’s a pretty basic thing. Countries that do anything more than a smattering of trade between them negotiate bilateral free trade agreements to bypass the more onerous WTO trade rules and tariff regime.
There’s Still Time to Negotiate a Trade Deal with the EU
As of this writing there are 409 days remaining until Brexit and either we will have a trade agreement with the EU, or we won’t. If not, it will be costly for both sides, but more costly for the EU by one order of magnitude!
However, saying that there are 409 days remaining ’til Brexit — isn’t the same as saying there are 409 days left to negotiate a free trade agreement. Far from it!
The two sides have 258 days to arrange a free trade agreement. Let’s hope our politicians (and theirs) are up to the job (and if not, why are we paying them?) otherwise almost everything that citizens and businesses purchase will become much more expensive on both sides of the English Channel in the post-Brexit timeframe.
UK Prime Minister Theresa May has stressed that October 29, 2018 is the last date that both sides can agree a trade and customs deal before the UK must begin readying for the implementation of WTO trade rules. And on that point both sides agree. Even six months (during the period from October 29, 2018 to March 29, 2019) would barely suffice to put in place the necessary measures and standards to allow industry to prepare for life after Brexit.
UK and EU voters should remember who did, and who didn’t, get a free trade agreement signed when they head to the polling booth at the next election.
At this moment in UK history, more money is needed to fund the NHS, schools, roads, railways, airports and other national infrastructure, Trident, foreign aid — and to fund 500 million sterling worth of renovations to the House of Commons.
Money is certainly the problem, as more money would solve all of those issues and many more.
Unfortunately, some governments ‘rob Peter to pay Paul’ but with little change in the total amount of revenue actually collected by the government.
- In some cases, a socialist (Labour) government will raise more revenue by raising taxes. Let the wailing begin!
- In other cases, a conservative (Conservative and Unionist) government will cut expenditures via fiscal and budgetary belt-tightening. Groan!
Which is why governments everywhere are always on the hunt for more money.
But are they? Are they really on the hunt for money? Are they really trying to increase revenue? Or do they automatically hit their default mode every time a budget crisis looms?
Some observers think that governments dismiss attempts to increase revenue via increased trade with other nations too quickly and move to their particular default mode.
Where Could the UK Find 1.3 Billion Consumers Wanting to Buy British Goods?
Well, India, for one. And they’re a Commonwealth nation. Ta-Da! See? It’s sooo simple.
All the UK government must do is to reach out to India’s leaders (especially post-Brexit, but nothing stopping them from getting started now!) in the interests of ramping-up trade by at least one order of magnitude.
Why should India purchase trillions of rupees worth of goods from non-Commonwealth nations when they could purchase them from the UK?
Why does India purchase their aircraft carriers from Russia, their fighter-bombers from Russia, other significant navy ships from Russia, and billions worth of goods from China, the southeast Asian nations, and the United States?
A century ago, Great Britain’s trade relations with India were booming. Shipyards couldn’t build ships fast enough to keep up with the annual increase in trade.
Who dropped the ball?
Heads should roll for allowing that relationship to falter — a relationship of prime importance to both the UK and to India!
Never Mind Playing the ‘Blame Game’ There’s No Time!
We need to get a piece of that rapidly growing and rapidly modernizing economy, and thereby add five per cent to Britain’s annual GDP.
Yes! More money will solve all of Britain’s spending problems… but it isn’t going to fall out of the sky and land in the Treasury building by itself!
Someone! Anyone! Perhaps the Prime Minister or the Foreign and Commonwealth Secretary (or both) along with the Queen should invite Prime Minister Modi of India and his high officials to London, for an unprecedented and long overdue re-look at the macro relationship between the two countries to see how increased trade could improve the economies of both nations, and how each nation can play to their own strengths and work to offset each other’s weaknesses.
Instead of UK Government Departments Fighting Each Other for Funding – Increase the Available Revenue Pool for All Departments
Companies fight over ‘market share’ because that’s what companies do. And it is often a vicious competition.
However, governments have an unparalleled advantage here because they can increase the overall size of the market — which, using this metaphor, relates to UK GDP.
By dramatically ramping-up trade with India the government could increase GDP by five per cent, easily meet the spending requirements of all departments and still have the economic clout to run balanced budgets indefinitely.
This so badly needs to be done that Brexit is a side-show by comparison, although without Brexit it would be difficult to enter into new trade arrangements with any non-EU country.
In summary, Brexit is merely the means to an end — an end with a much stronger economy for both Britain and India, and a stronger Commonwealth partnership.
by John Brian Shannon | February 10, 2017
Under the expert care of Exchequer Philip Hammond, Britain’s growth rate will outperform all developed nations until 2050
What a relief it must be for Prime Minister Theresa May that the UK economy is expected to grow strongly every year until 2050, with a growth rate that surpasses all developed nations.
Britain will grow faster than any other major advanced economy over the next three decades as the EU’s share of global output diminishes, according to PwC.
UK economic growth is predicted to outpace the US, Canada, France and Germany between 2016 and 2050, with average annual growth of 1.9pc.
This is also double the average annual pace of growth expected in Japan and Italy. — The Telegraph
The chart below shows the average annual real GDP growth rate of G7 countries from 2016 to 2050.
And to show where the UK ranks in terms of global GDP here is another graphic for you.
It seems that Brexit will barely register as an economic hiccup and that Britain’s economy will continue to thrive in a post-Brexit world — and that, after many dire reports to the contrary were published prior to, and since the June 23 2016 referendum on EU membership.
You see? The sky isn’t falling, it’s snowing. Get outside and enjoy it! The UK is going to be just fine.
- Brexit will not affect UK economy’s long-term future (The Independent)
- The World in 2050: Will the shift in global economic power continue? (PriceWaterhouseCoopers)