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30.5.17

Why No Deal is the only way forward


With her local policies causing nothing but problems for Prime Minister Theresa May, she’s turned attention back to Brexit to bolster support.



But now her opposition has sanctioned Brexit too. Jeremy Corbyn promises to get a deal with the EU. May still says no deal is better than a bad deal.

The confusing aspect of all this is that the maths is very simple. Assuming we take the Brexit route, there are two options. A Brexit with and without a deal.

We know what a Brexit without a deal looks like. Britain reverts to World Trade Organisation (WTO) rules. The EU, under WTO rules, is a nasty place to export to. It has high tariffs and restrictive rules.

But much of the rest of the world is not as anti-trade under WTO rules. And with free trade agreements, huge gains for trade could be made which EU membership was hindering. Trade in the rest of the world is growing fast. The point is that the outcome of a Brexit without a deal is fairly predictable, at least in terms of the frameworks we face for trade.

The simple maths, then, is that the EU must offer us a better deal than the one we’d get with it under WTO rules. Anything else is a waste of time.

Ginormous divorce bills are certainly not compliant with WTO rules, for a start. Threatening the UK with them reduces the probability of a deal, but has no other effect. It doesn’t harm Britain unless we agree to pay. Inside the WTO framework, Britain is protected from the EU’s vindictiveness because the protectionist bloc cannot treat us differently from other nations.

The obvious course of action is to have as many free trade deals as possible ready to go once we leave the EU. Then sit and wait for the EU to make the case for why its proposed Brexit deal is better than WTO rules between us. It has to make that case. It’s not really a negotiation. We are leaving. It must make us an offer.

And remember, the longer we wait, the weaker the EU’s position. The EU’s struggling states are illustrating just why at the moment…

5 comments:

  1. Please , do enlighten us! Which products such as milk or butter. Please do also reveal whom the UK will sell its services, considering that right now 80 % of the commercial balance of UK exports consist in services rendered to the other 27 EU countries, because - fundamentally - they are cheaper in the UK. If they cease to be cheaper, guess what!

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    1. Guess what? What?
      "Unknown" posts an incoherent reply lacking all understanding of economics and expects us to take it seriously?
      You should stop listening to the pro-eu gravy snorters "Unknown". You mignt then be able to form your own conclusions from accurate information. If you opened your mind to reality amd stopped being a snowflake, you woild realise that the EU is a scam!

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  3. This article proves that brexit dont feel confortable and try again to excite people designating "uglys and kinds" ! For instance "Vindicative" is an innapropriate word when you talk about a political, diplomatic, commercial deal. It drives to propaganda excitation ...
    EU and Britain have interest with a good deal. Common market facilitates trade and prosperity all over Europe.
    The two sides want the best benefits for them now we are not part of the same body. (that's the change !)
    UK brexiters has already lost when they expect a breakthrough of euro, EU.
    EU is ONE body, euro is still strong.
    Political propaganda may be useful for votes in June but wont change the real situation.
    EU is ready with a "no-deal" if needed. But it would be a shame for all, except extremists.

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