18 September 2018

EPC: The road to nowhere? Prospects for a post-Brexit trade deal

He argues that:

1. The upcoming negotiations of a “deep and comprehensive partnership” will be even harder than the discussions leading to the Withdrawal Agreement for at least three reasons:

• First, the EU negotiators will have a strong mandate to deliver on the specific objectives of each member state, which will amount to a long wish list containing many politically tricky issues for the UK.
• Second, the scope of the negotiations will be much broader given the breadth and depth of the existing relationship.
• Third, the future EU-UK relationship will have repercussions on their respective trading with third parties.

2. There will be no gains from trade to be made compared to the current status quo. Leaving the Single Market will entail costs across all sectors. Negotiations will inevitably have to focus on an inferior trade deal. There will be no gains from further opening of markets but costs of disintegrating the existing relationship.

3. The transition period may lead to an alternative, however. After Brexit will have been delivered, there could be a general inclination to maintain the status quo and put an end to upending of the UK’s economy. A cross-party alliance supported by business and trade unions could argue that a soft landing in the form of a Norway+ agreement is the best possible option to minimise economic costs.

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