So far, the debate over what happens to UK-EU trade after Brexit has been conducted around a rather odd premise: that the EU will be out to punish Britain by cutting us off unless we sign up for continued membership of the single market, with free movement of people and contributions to the EU budget. Certainly, this is the impression which many EU leaders have been keen to create, and one which the ‘Remain’ lobby is more than happy to promulgate.
Yet it sits rather uneasily with reality. As the Leave campaign consistently pointed out before the referendum, the EU would be mad to start a trade war because the rest of the EU sells more to us than we sell to the rest of the EU. Today, Civitas publishes a report which calculates just how much British and EU exporters would lose out if – this being the worst-case scenario – post-Brexit Britain and the EU resort to trading under World Trade Organisation (WTO) rules.
Assuming there was no change in what was traded across the English Channel – which obviously wouldn’t be the case as consumers would start to shop around elsewhere – UK exporters would, under WTO ‘Most Favoured Nation’ (MFN) rules, find themselves paying £5.2
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