Leaving EU without trade deal would not hurt UK - Thinktank

Leaving the European Union without a trade deal in place would not be a disaster for the British economy, a right-wing think tank claimed on Friday.

In a report, the Institute of Economic Affairs (IEA) said Britain should instead focus on unilateral free trade with major partners such as the US, Canada and Australia.

“This would bring us significant benefits including lower prices for consumers, increased productivity and higher wages by eliminating all barriers to imports,” the IEA said.

The IEA's position was countered in a separate report by fellow thinktank, the Institute for Government (IG), which said no deal would place the UK “in a worse place than any other major trading partner and will maximise disruption”.

It said this was evidenced by the fact that no major country trades with the EU on World Trade Organisation terms.

The government on Tuesday published a position paper outlining its proposals for “frictionless trade” once it had left the EU in March 2019 – a claim that was derided as “fantasy” by the EU parliament's Brexit representative Guy Verhofstadt.

The IG said a more ambitious trade deal that recognised the starting point of convergence and covered the breadth of UK sectors” would be much more difficult to negotiate but could deliver a significant reduction in disruption”.

However, it added that there were “big question marks over its negotiability both within the Article 50 window (the two year period to negotiate Brexit) and in general”.

“In the longer run, if the UK sticks to its existing ‘red lines’ and the EU makes it clear that it is not prepared to grant the benefits of the single market without the obligations, a deal like this becomes less viable,” the IG said.

The EU has insisted that membership of the single market can only be retained if the principles of free movement of people, goods and services are adhered to. Britain largely voted to leave the bloc over immigration concerns.

Meanwhile, Commonwealth countries said the UK government should give their citizens the same rights as Europeans to come and live in Britain after Brexit.

Julie Bishop, the Australian foreign minister, reportedly told The Times that her colleagues would be concerned if Britain imposed more restrictive conditions for Australian workers than for those from the European Union.

The paper cited an unnamed Australian government source as saying the country’s concerns were shared by New Zealand and Canada and suggested that the issue would be brought up in any trade talks.