UK ‘faces bigger Brexit risk than EU’
Bargaining position very weak, warns new study
POLITICS: The UK is said to be almost five times more exposed than the rest of the EU to negative economic impacts from disruptions to trade caused by Brexit, putting Britain in “a very weak bargaining position”.
THE UK is almost five times more exposed than the rest of the EU to negative economic impacts from disruptions to trade caused by Brexit, putting Britain in “a very weak bargaining position” as talks on the future relationship get under way, a new study has found.
And regions which voted Leave in last year’s referendum are among the most vulnerable to an economic hit to their incomes and growth rates, found the study by researchers from the University of Birmingham.
The researchers said their findings show it is “not correct” to argue, as some Brexit-backers do, that Britain’s trade deficit with the rest of the EU gives it an advantage in negotiations, because the remaining 27 nations have more to lose in terms of exports.
Their analysis of trade relationships found a “very different” picture, under which the loss of access to the single market and customs union is “far more damaging” to the UK than the EU27.
The research found that “all UK regions are systematically more vulnerable to Brexit than regions in any other country”, with trade-related risk exposure ranging from almost 17 per cent of GDP in parts of the North to ten per cent in London and northern Scotland. The most vulnerable regions were Cumbria (16.8 per cent), the East Riding of Yorkshire and north Lincolnshire (15.8 per cent), Gloucestershire, Wiltshire & North Somerset (15.6 per cent), Leicestershire & Northamptonshire (15.4 per cent) and Lancashire (15 per cent).
Overall, the results show that 2.64 per cent of EU GDP is at risk because of Brexit trade-related consequences. In the UK, Brexit trade-related risks account for 12.2 per cent of UK GDP, said the report.
And the researchers warned that their analysis “may not represent an upper bound, and that the actual Brexit-related exposure risks facing the UK and its regions are even greater”.
But elsewhere in Europe, Germany has the highest exposure level at 5.5 per cent of GDP, followed by the Netherlands (4.4 per cent), Belgium (3.5 per cent) and France (2.2 per cent). Other EU nations – with the exception of tiny Malta (5.1 per cent) – face “almost no exposure at all”, with southern European states like Italy, Spain and Greece barely affected.
“The UK and its regions are far more vulnerable to trade-related risks of Brexit than other EU member states and their regions,” said the report by the university’s City Region Economic and Development Institute (City-Redi), published in academic journal Papers in Regional Science.
“As such, the UK is far more dependent on a relatively seamless and comprehensive free trade deal than the other EU member states.”
The news comes as Theresa May told senior Government colleagues Britain must “aim high” in negotiations with the EU over a post-Brexit trade deal. But there was no agreement at a meeting of the so-called “Brexit war cabinet” over the kind of relationship Britain should seek with its former partners, with deep divisions emerging over the extent to which the UK should mirror EU regulations after withdrawal.
Brexiteers such as Boris Johnson, Michael Gove and Liam Fox – alongside Defence Secretary Gavin Williamson, who backed Remain in the referendum – were understood to be vocal on the need to “diverge” from the EU rulebook to maximise the opportunity for new deals elsewhere.
But it is believed “soft” Brexit backers such as Chancellor Philip Hammond and Home Secretary Amber Rudd leaned towards “alignment” with Brussels rules to maintain close ties with the EU in the future.
The meeting came before Mrs May briefed the House of Commons on last week’s Brexit talks breakthrough. The PM set her face against a second referendum, telling MPs it would mean “betraying the British people”. And she dismissed claims the Government wanted to ditch the 48-hour working week limit in the EU’s Working Time Directive.
The UK regions are vulnerable to traderelated risks of Brexit
University of Birmingham academics in a new report into trade after Brexit.