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As the reality of WTO trade kicks in, Brexiteers face challenges in realising their 'global Britain'

Now the Brexiters need to identify any announcement by any company of increased investment or the creation of jobs in the UK because of Brexit

Friday 24 August 2018 18:44 BST
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The Brexiteers, with Jacob Rees-Mogg and Nigel Farage the most prolific media performers, dismiss WTO-related concerns
The Brexiteers, with Jacob Rees-Mogg and Nigel Farage the most prolific media performers, dismiss WTO-related concerns (Getty)

Why didn’t anyone ask him before?

Given the mounting fear – or enthusiasm in Eurosceptic circles – that the UK may soon have to trade with the European Union on “World Trade Organisation rules“, it might have been an idea for someone to ask the head of the WTO what exactly that might entail.

Now the BBC has done just that, and Roberto Azevedo, the WTO director general, has made a dramatic intervention in the Brexit debate, simply by explaining what his organisation's rules actually are. With some understatement he has said that a no-deal Brexit would “not be a walk in the park”.

He also punctured the free trading zeal of the ultra-Leavers by pointing out that if the UK unilaterally reduces or abolishes tariffs and non-tariff barriers on UK-EU trade, then it must do so for all countries too, because it was not being done as part of a formal trade deal. If there is to be a full trade treaty with the EU, Mr Azvedo advises, with the weight of experience on his side, that it will take longer to negotiate than the period between now and the putative Brexit date of 29 March 2019.

The options in front of “Global Britain”, therefore are narrower than many assumed, and no amount of unity or “belief in Britain” can alter the realities of the global trade regime, or Britain's relatively weak position in relation to potential new trading partners, such as the US, China and India, as well as the European Union itself.

No wonder, then, that the chancellor, Philip Hammond, has repeated his warnings about the fiscal consequences of a no-deal Brexit. Behind the percentages of GDP and the billions upon billions of lost tax revenues lies the future of vital public services. The May government has, apparently sincerely, set itself some ambitious goals for the overhaul of the care system and of social security, though universal credit, boosting infrastructure, housing and pledged to enhance funding for the NHS, among others. It also wants, as a Conservative government might be expected, to project British power on the world stage through the defence budget.

All of these aims are jeopardised by Brexit, even on the most favourable terms that could be possibly imagined. What was true during the referendum campaign is still true today: that no variety of Brexit can be more beneficial to trade with the largest single market in the world, the EU, than membership of that single market. Estimates vary, but Project Fear was right all along about the long-term damage to British interests as markets become closed to British exporters, profits decline, employment suffers, the economy grows less rapidly and all of those things result in a lower tax take and higher spending in unemployment benefits and the like. Public sector borrowing, at last coming under control after the financial crisis and then the misguided policy of hard austerity, will inevitably rise – but even so can only take some of the strain, given the level of national debt and the normalisation of interest rates.

Hard choices, then, and cuts will follow, and it would be reckless for any chancellor to fail to register that with the public, who have a right to know what is about to befall them. The vast number of unforeseen administrative problems highlighted in the government’s Brexit briefing papers are the least of the UK’s long-term challenges.

The Brexiteers, with Jacob Rees-Mogg and Nigel Farage the most prolific media performers, dismiss all of this. They claim, from first principles, that trade with the rest of the world will expand, which it will, because the world economy is expanding, and disguising some of the damage Brexit is already inflicting. UK trade with the rest of the word can expand from inside the EU. Germany, for example, is a member of all the EU’s various clubs, and one of the most successful exporting powers in the world – already a trade superpower from inside the EU, including to emerging markets such as China, where Britain can only aspire to such status.

The greatest challenge to the Brexiteers is to identify any announcement by any company of increased investment or the creation of jobs in the UK because of Brexit. On the contrary, business investment remains depressed, both because of the uncertainty and because of the fear of Brexit. Every time the prospect of a no-deal withdrawal looms into view, the pound slips on the foreign exchanges, on the assumption that only a heavily depreciated sterling will allow the British to compete in the world markets that the nation depends on for its livelihood. Whatever else, the Brexiteers are losing the argument as the Brexit day looms; perhaps that is why they fear a Final Say referendum so much.

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