Who needs a trade deal?

Daniel Hannan MEP (picture Bastin)
Daniel Hannan MEP (picture Bastin)

Debate rages, in the House of Commons and elsewhere, about what remains after Britain leaves the EU. (OK, debate doesn’t particularly rage in the House of Commons, but it needs to, even if the government would rather it didn’t.)

In particular, there is the question of the trading relations between the UK and the EU27. At present, there are consistent regulations, no tariffs and no customs procedures. Which of those will survive?

The idealist believes that they all will. There is no economic reason to change anything, after all. Here’s Daniel Hannan MEP, for example:

Full WTO tariffs would cost British exporters £5.2 billion and EU exporters £12.9 billion. Which is why neither side will impose them.

But we can’t rely on economics. If politics didn’t trump economics, we wouldn’t be in this mess in the first place.

And let’s take a closer look at Daniel Hannan’s maths.

A tariff, which he treats as a tax paid by exporters, is better understood as a tax paid by consumers. That’s how a liberal would describe it, anyway. So, rather than the EU paying £12.9 billion and the UK £5.2 billion, the actual costs fall the other way round.

The failure of the UK and the EU to agree a replacement for their current single market trading rules would cost EU consumers £5.2 billion (£12 each) and British consumers £12.9 billion (or 202 each, that is 17 times as much).

As the negotiating deadline gets close and both sides are looking at failure, the British negotiating team will be looking 17 times as nervous and have 17 times the urge to make concessions to keep the talks afloat.

Not a happy position for a country to be in, still less a position a country has chosen to be in. No wonder Daniel Hannan can’t face the maths.

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