Wednesday, 29 April 2020

The UK leads the world yet again

There is ample scope for debate about the likely impact of Brexit on the UK economy and the wider EU economy; the only thing which is entirely certain is that a country which deliberately places itself outside the regulatory mechanisms of a single market and opts out of agreements on standards and enforcement will inevitably find that there are more barriers to trade than there were previously. How large those barriers need to be is as yet unresolved, as is the extent to which barriers to trade in one direction are compensated for by the removal of barriers elsewhere. Most economists and experts in the field take the view that increasing barriers with our closest neighbours will do significantly more harm than the benefit gained by removing barriers elsewhere. On the other hand many Brexiteers believe (although are rarely prepared to publicly justify taking such a stance) that there is an inherent (non-economic) benefit in being able to set rules without needing to consult or agree with anyone else. The basic economic point, however, is beyond question (except to those who believe in unicorns and other fantastic creatures): opting out of the world’s largest and most successful single market will create barriers to trade with that market, and whilst it might seek to minimise those barriers by demanding exceptional treatment, pushing ahead with the creation of those barriers despite the coronavirus pandemic is the official policy of the UK government.
Which brings me to the UK’s Trade Minister, and the extraordinary letter which she has penned jointly with the trade ministers of Singapore, Australia and New Zealand. In this letter, she (a prominent Brexiteer, although probably most ‘fondly’ remembered for her condemnation of cheese imports, a position which seems rather at odds with the letter’s condemnation of protectionism) and her co-authors argue strongly against creating new trade barriers in the environment which has resulted from the pandemic, stating that “…putting in place more trade barriers would be the worst possible response to global economic uncertainty”. Well, yes, indeed – it would be a very silly response. But then demonstrating to the rest of the world how not to do things when faced with a pandemic is about the one thing at which her government is showing itself able to excel.

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