British meat exports to the EU single market will face sizeable tariffs if the UK fails to negotiate a trade agreement with the European bloc, it has been warned.
Speaking at the London School of Economics on Friday, July 7, figures from the Confederation of British Industry (CBI) outlined the consequences of a “no deal is better than a bad deal” scenario, as repeatedly iterated by UK Prime Minister Theresa May.
CBI Chief Economist, Rain Newton-Smith, explained the UK would face tariffs on 90% of its EU goods exports by value; although the average tariff would be 4%, the penalties for meat exports would be considerably higher at 26%.
Taking an average tariff of 4%, the increase in tariff costs would be up to £6 billion (€6.8 billion) per year – the equivalent of 0.3% of GDP per year.
“This is a partial equilibrium analysis in the parlance of economists. It does not take into account how the economy here in the UK, or in the rest of the EU, would respond, nor does it show what it would mean for some goods,” Newton-Smith said.
Some have argued that the weaker exchange rate would offset the cost of tariffs. This is true, but only up to a point.
The CBI is calling for the UK government to negotiate a transitional arrangement that would allow the country to remain in the single market and the customs union until a final deal is reached.
The lobbyists’ Director-General, Carolyn Fairbairn, added: “We should make it on the basis of benefit to firms and prosperity across the continent of Europe. Everyone has this goal at heart. And we urge Brussels to agree.
“Breaking from its mantra that ‘nothing is agreed until everything is agreed’ – for the good of the European economy.”
Meanwhile, the National Farmers’ Union, which represents farmers in England and Wales, reiterated its call for three core principles for trade after Brexit.
These are:
- Maintaining continued access to the EU single market with minimal tariffs and non-tariff barriers;
- Basing negotiations on detailed economic assessments and consulting with the industry before offers are exchanged;
- Ensuring UK farmers are not put at a competitive disadvantage to overseas producers subject to different standards.
