The Leave campaign promised that a trade deal with the EU would be easy, that they needed it more than we did, that it would be the fastest trade deal ever done. They said that German car-makers would be desperate to keep trade open and that - crucially - the EU exports more to us than we do to them.
The last is true by value - but the EU is much bigger than us. Around half our exports go to the EU, while their UK exports are only 8% of their total. Frankly, they don't need us a quarter as much as we need them.
So what about the money they want? We could say we will walk away and pay nothing. Defaulting on our debts would push down our international credit rating, but that is already being downgraded as the economic damage of Brexit becomes ever clearer.
Sadly, non-payment would only annoy them. The money we owe makes up only 0.1 percent of the EU GDP. They certainly wouldn't blink first. And if we don't honour our obligations then any trade deal we negotiate later with the EU will definitely involve the UK paying back the debt.
With the boasted US deal now just another abandoned promise, with Mr Fox unable to even negotiate 'roll-over' trade deals, and with just sixteen months left (having spent eight months failing to agree on expatriates, even though both sides want the same thing) Mrs May needs to clear the cabinet of Brextremist headbangers and negotiate from where we really are rather than where Leave claimed we would be.
The EU aren't offering us a trade deal, they are offering a framework for our future relationship. Our best strategy is to take that and build in a lengthy transition period. We will then have time to work on individual sectors, even individual contracts, so that we build up a trading network within the new deal. Post-transition the Leavers will have their sovereignty and the rest of us will have a functioning economy.
No comments:
Post a Comment