A chorus of commentators are telling us that it’ll be impossible for the UK to negotiate a free trade agreement with the EU in two years (once we’ve triggered Article 50), which means we’ll have to revert to WTO rules, and the subsequent tariffs will plunge us into an immediate, long-term recession. Not just a recession, but an out-right depression.
Are these commentators on to something? Is this likely? Before getting in to that, it might be worth noting that these are often the same people who told us that voting leave on June 23rd would result in an immediate recession. Remember that? Even if you do, they’ve forgotten.
The goalposts have moved. It’s now “economic Armageddon is still coming because of Brexit. But it hasn’t happened yet because Article 50 hasn’t been triggered.” Once Article 50 is triggered? It’ll be: “Okay, well, economic meltdown hasn’t taken place yet because we haven’t left.” Once we leave? Well, there will be more excuses.
At some point, given the ridiculous monetary policy of most western governments right now, there will also certainly be a global financial contraction. Maybe a big one. Maybe bigger than 2008. And when it happens – though Brexit is unlikely to be the culprit – you’ll be sure those same commentators will blame our decision on June 23rd this year.
Because of all of this, when I hear warnings of economic disaster due to us trading with the EU on WTO terms, I get sceptical. It’s the more of those same unqualified pronouncements that for some reason must be respected by virtue of the fact that they’ve been made. That makes no sense to me.
Right now, the chances of us getting a free trade deal sorted between March 31st 2017 and April 1st 2019 is about 50/50. If we had to do a deal from a standing start, I’d say we only have a 5% chance, given the EU’s awful history of this. But our terms are already active and in place. That should make it 99% certain that we’d secure a deal. But, the dead hand of the EU Commission and the other EU high-ups make it much harder than it should be. Though to be honest, don’t their petty hostilities right now justify our decision to leave?
And even if we do revert to WTO rules, will it really result in instant economic collapse? We pay £9.7 billion net into the EU a year. The tariffs (at current trading levels) are likely to be less than £3 billion a year for us. Much higher for the EU (we do have a massive trade deficit with the other 27 member states after all), but that’s just a good incentive for the 27 to strike a free trade deal with us.
But let’s end on a good note. The reason I think we’ve got at least a 50% chance of getting a deal in two years is the disconnect between the directly democratically-elected governments of the nation-states and the high-command in charge of the EU executives.
The EU guys talk tough because they don’t have to face a ballot box. But even the most sycophantically pro-EU governments in the 27 member-states are accountable. And if they push for rulings that make it harder and more expensive for, say, BMWs or French wine to be sold in the UK, their chances of re-election are, at least slightly more difficult.