All of Boris Johnson’s new post-Brexit trade deals, according to the government’s own statements, will have economic benefits of just £ 3 to £ 7 per person over the next 15 years.
The tiny economic boost – amounting to just 0.01-0.02 percent of GDP and less than 50p per person per year – is dwarfed by the economic impact of the exit that the government has put on over the same period Estimates 4 percent of GDP.
According to an analysis on behalf of The independent one By top academics at the University of Sussex’s UK Trade Policy Observatory, the much-vaunted Free Trade Agreement (FTA) “hardly scratches the surface of the UK’s challenge to offset the loss of GDP from leaving the EU”.
Mr Johnson boasted that the deals “create a new dawn” and represent “global Britain at its best” – but only two of the dozen announced since Britain left the EU are likely to have any measurable economic impact.
Official estimates by the Office for Budget Responsibility point to a Brexit loss of more than £ 1,250 per person in the coming years – more than 178 times the most optimistic forecast for the benefits of the trade deals.
The analysis finds that the vast majority of the free trade agreements announced by the government – for example with South Korea, Singapore or Vietnam – are merely attempts to replace these countries’ agreements with the EU, which Great Britain had previously enjoyed as a member.
“They add nothing to British trade and, because they are not perfect replicas, harm it, only marginally,” wrote leading trade economist Professor L. Alan Winters, who carried out the analysis with Guillermo Larbalestier, the centre’s researcher.
Taking up the results, Labor said the government had “gambled” and lost with Britain’s prosperity. The opposition called for an improvement in Mr Johnson’s Brexit trade deal with the EU so that the UK would “stop the bleeding of our trade with Europe”.
A source from the Department of International Trade claimed the analysis was based on “old, static” numbers – although most of the data was only released last summer as part of the government’s strategic reasoning for the deals.
“Our Global Trade Outlook published in September shows that the focus of world trade is shifting away from Europe towards fast-growing markets in the Asia-Pacific region,” said a spokesman for the ministry for international trade about the results.
“Our strategy is to bind the British economy to these markets of tomorrow and to take advantage of the enormous economic opportunities as an agile, independent trading nation.”
But after the analysis prepared for The independent even a new agreement with Japan, which the British government presents as a significant gain that goes beyond what has been agreed with the EU, is “extremely closely modeled on the EU-Japan agreement, with a few minor differences.”
If so, the benefits of a small expansion of digital commerce are likely to be overshadowed by a technical change in customs regulations that will put some UK exporters at a disadvantage compared to their EU counterparts.
Taking into account the EU’s own agreement with Japan, the researchers wrote: “The government estimated that this was not an agreement [the Japan agreement] UK GDP would rise by 1.5 billion
New economic benefits are only to be expected in the basic deals with Australia and New Zealand – these countries, however, represent such a small part of British trade that they have little effect. The analysis also notes that the agreements have not yet been signed or ratified and so far have only been “agreements of principles”.
The DIT source added that the government wanted another “wave of ambitious trade deals with major economies such as India, Canada, Mexico and the Gulf” – although these are not yet coming. The administration has stopped claiming in recent months that it is on the verge of a trade deal with the US – the biggest price ever – after Donald Trump’s electoral defeat shattered any hope of an early arrival.
However, scientists at the UK Trade Policy Observatory dismissed the idea that trade deals could ever counter the economic damage of Brexit.
“Non-EU partners account for around half of all UK trade. To counter the 4 percent loss of the 4 percent OBR caused by Brexit, agreements would need to be made with each and every one of them to bring about trade changes that lead to a 4 percent increase for the UK’s GDP. It’s nowhere to be seen in the numbers in the table, ”they wrote.
“The sad answer is that for us the government is happy to accept the economic losses caused by Brexit for political advantages (sovereignty) and trade agreements with other countries only make the best of a bad job from an economic point of view.”
Emily Thornberry, the international shadow trade secretary, said The independent one: “The government’s big economic gamble was that we could offset the losses from their botched Brexit deal by expanding our trade with the rest of the world.
“But what this analysis shows is that – also according to the government’s own statements – this game of chance has always been doomed to failure.
“It’s time to change course. The government cannot go on with policies that don’t work; Instead, we need measures to stop our trade with Europe from bleeding out and to close the holes in the Brexit deal. “