How Bright Are the Prospects for UK Trade and Prosperity Post-Brexit?

Abstract

So long as the UK government liberates itself from the protectionist mindset of the EU and reduces trade barriers after Brexit, and UK businesses respond positively to the challenge of increased international competition (through increased productivity), the prospects for UK trade and prosperity post-Brexit are very bright indeed. The EU itself acknowledges that 90% of future growth in global GDP will be outside the EU. The costs of remaining in the EU are very high and not all purely economic: the EU is no longer a force for global liberalisation. On the basis of both international and EU law, the monetary costs to the UK of leaving the EU should be fairly low. Similarly, the frictional costs to both the UK and the EU of their post-Brexit relationship should also be low. However, as a consequence of both the concessions made to date by the UK in order to demonstrate its goodwill and the hard line taken by the EU in order to discourage other member states from leaving, these costs could well end up being much higher than they need be for both sides. Of particular concern is the EU’s ‘level playing field’ demand, laid out in its negotiating Guidelines for a future trading relationship. This would effectively prevent the UK from achieving regulatory autonomy or from pursuing an independent trade policy.