There has been a lot of debate when it comes to the details of the UK’s exit from the EU, but here’s one thing to sway the discussion: a potential £135 billion annual boost to the economy. The economic payday comes with a “hard” Brexit, an idea that has divided politicians and voters for months. However, just because it is a large boost for the country doesn’t mean it is agreed upon or anywhere close to a done deal.
Projected Economic Boost
A number of economic plans have been discussed, but according to Economists for Free Trade (EFT), the post-Brexit arrangement that gives the greatest boost to the UK economy is a hard Brexit followed by unilateral free trade.
In a new 50-page report, the group of pro-Brexit economists paints a positive picture for the UK’s post-EU future if the country embraces unilateral free trade. As opposed to a soft Brexit that would maintain as much of the UK’s current trading relationship with the EU, a hard Brexit would have the UK give up access to the single market and to the customs union to pursue other trade deals.
“The Government should embrace a clean, swift Brexit—avoid the uncertainty of a long, drawn-out transition and embrace the opportunities of Brexit,” said EFT economist Patrick Minford.
EFT calculates that the plan could add £135 billion a year to the country’s economy. With a hard Brexit, the country would see a surge in national output worth around £5,000 a year, on average, for every household. By removing tariffs and all barriers on trade from around the EU and the rest of the world, the UK could see trade gains of £80 billion a year. Deregulating the economy could give an extra £40 billion boost annually, contributing to the £135 billion total.
According to EFT economists, Brexit represents a fresh start for the UK when it comes to trade and will allow the country to make its own independent decisions. They argue that businesses and consumers in the UK would benefit from lower priced imported goods. With increased competition from foreign goods, firms would be forced to raise their productivity.
“This is a once-in-a-generation opportunity to raise living standards and create new employment opportunities across the country,” said Roger Bootle, chairman of Capital Economics. “On the basis of its record, the EU is likely to make cack-handed decisions about the issues of the future.”
Soft Brexit Disagreement
The new report isn’t universally accepted, however. Other economists say the EFT ignores basic fundamentals of trade with a plan that would put the UK on track to lose economic power. Removing all trade tariffs unilaterally could also create unfair competition.
“Some foreign firms from outside the EU can produce more cheaply because they pollute, or treat workers in ways that we find unacceptable,” said Economist Dr Monique Ebell of the National Institute of Social and Economic Research. “So we impose tariffs to level the playing field. That is legitimate, and only fair.”
Other economists predict that a completely free trade system would flood the UK with imports, making it difficult for domestic farmers and manufacturers to compete, which could lead to unemployment and bankruptcy.
And it appears that no matter the projections from the new ETF report, the Government is still working for a relatively soft Brexit. Chancellor Philip Hammond has repeatedly stated that the UK will follow the EU’s high-tax, high-regulation model after it leaves the EU. An unnamed Government spokesman said the UK would maintain a “deep and special” relationship with the EU, noting that the economy has grown in the last few years and the Government hopes to keep that momentum even after the UK leaves the EU. However, Theresa May has long been a proponent for a hard Brexit. The final decision will come down the negotiation table.