To add to the Brexiteer woes following the publication of a draft withdrawal agreement, the IFS has looked at the potential benefits of leaving the EU's customs union in order to strike up trade deals of our own around the world. Much was made in the campaign and afterwards of how much the housewife would save by cutting tariffs on foodstuffs and the like. The IFS' short report is HERE
Currently, the average tariff applied on the sorts of goods the UK imports is not particularly high – at around 2.8% if we account for the EU’s various agreements with other countries. Under some quite optimistic assumptions about the price changes that are likely to follow tariff reductions, we estimate that complete abolition of all tariffs would reduce prices faced by households by about 0.7–1.2%. This could have additional positive economic benefits in the long run but could also be very damaging for some UK industries in the short run. That is why some have suggested focusing tariff reductions on goods that the UK does not produce itself. This would result in much smaller gains, reducing the total cost of the basket of goods purchased by the typical household by less than 0.4%. This compares with the estimated 2% increase in prices that followed the depreciation in sterling in the wake of the referendum result.
In other words there is no benefit or rather none that anyone will notice. We might buy lemons a bit cheaper and that's about it. The BBC summarise the findings HERE. Julian Sturdy, Conservative MP for York Outer, farmer, idiot and Brexiteer may want to dwell on the phrase, "could also be very damaging for some UK industries in the short run" because this is almost certainly about farming. Oh dear!
The IFS also make this important point:
The IFS also make this important point:
"As a member of a customs union with the EU, the UK could still strike deals with other countries, but only if they did not mean that the UK adopted different customs regulations from the EU – for example, it could sign agreements with other countries facilitating trade in services".
Services make up 80% of our economy so we are already free to sign trade deals outside the EU anyway.
No doubt Brexiteers will claim the IFS are secret remainers, EU stooges just trying to continue project fear. How long will the Brexiteers be able to get away with it? Not for ever, that's for sure.
