Thursday, 1 June 2017 By Mid-Devon Advertiser in
Prof Alan Gregory (Emeritus Professor of Finance, University of Exeter), of Salty Lane, Shaldon, writes:
When I read Anne Marie Morris’ column in this newspaper last week, I was reminded of J R R Tolkein quote: ‘False hopes are more dangerous than fears’.
The confidence of Mrs Morris that all will be fine after a Brexit is something we might want to believe in, but facts suggest we should be wary.
First she suggests that the erection of tariff barriers between the UK and the EU-27 are unlikely, because they sell more to us than we do to them. But this misses the point that EU-27 exports to the UK account for only around 3-4 per cent of their total economic activity, while our exports to them are 13 per cent of our economy (Source: fullfact.org). So the UK actually has the weaker bargaining position.
However, according to Mrs Morris, even if we end up with no deal and relying on World Trade Organisation rules, apparently it will all be fine. Will it really? True, we can still trade with the EU, and tariffs for manufactured goods might be no more than 5 per cent, but even low tariffs will be disruptive to our modern manufacturing supply chains, where components currently freely go to and fro over the border: WTO rules will cost jobs.
Then for agriculture under WTO rules, tariffs will be as high as 30-40 per cent, so not so great for our farmers and fishermen exporting to the rest of the EU. And even the WTO has warned the UK to be aware of the cost of falling back on its rules.
They have calculated that the cost of WTO import tariffs that we will have to comply with will be £9 billion to us consumers. All this is before we even begin to consider the serious impact of non-tariff barriers.
We have not heard enough about the role that EU membership has played in repairing our economy from its disastrous state 40 years ago. The economic prosperity it has brought to our economy has far exceeded our budgetary payments. We simply cannot afford to be complacent about leaving the EU with no deal.
It is hard to see how we really are going to be taking back control, with WTO rules replacing EU rules, and our economy weakened by damaging our trade links with the EU-27.
The important point is that there are arrangements that could satisfy those who voted to leave the EU whilst minimising any damage to the UK economy – for example, Norway has struck a mutually satisfactory deal that keeps its agriculture and fisheries outside the EU Common Agricultural Policy whilst allowing free trade in other areas.
Unfortunately, Mrs May and her Conservative colleagues have so far rejected such alternatives out of hand.