Zero tariffs

Economists all agree that free trade is a Good Thing. If you reduce barriers to trade then your manufacturing and service industries will specialise in what they are best at, boosting exports, productivity and wages. Certain sectors will disappear as other countries specialise in those areas and we import those items and services rather than produce them ourselves.

This also happens within countries - there are steel-producing regions (Sheffield in the UK) and service-oriented regions (London). It is happening within the EU since trade barriers are low or non-existent. For example, London has the greatest concentration of financial services in the EU.

Pro-Brexit economists say that it is therefore a no-brainer to leave the EU and unilaterally reduce our tariffs to zero. Instead of restricting ourselves to a free market within the EU we can trade with the whole world on the same terms.

Certainly this model would solve our customs problem - essentially we would only need to check for illegal imports.

So why are the Brexit-boosters trying desperately to set up trade deals? Because setting our tariffs to zero won't mean other countries would do the same. So our exports will have tariffs imposed, while imports won't. How do we bring in trade deals? We offer good terms. If we are already giving away zero tariffs then we have nothing to offer.

Clearly having tariffs imposed on our exports means our industries will find it hard to compete abroad. For example, WTO rules impose a tariff of 10% on cars. In contrast, overseas companies will have unrestricted access to the UK. It doesn't take an economist to see that many of our industries will take a severe beating. As one pro-Brexit economist admits, "you are going to have to run [the car industry] down."

Britain today has a current account deficit of £23 billion (it was zero in the 90s). Eliminating tariffs without any preparation would destroy much of British industry and ramp up imports to unprecedented levels, dragging the pound ever lower and pushing prices ever higher.

If we crash out of the EU we need to cushion the disaster. We need to give industry time to adjust to harsher trading conditions, not impose the harshest possible outcome instantly. Britain was working before the referendum. Why break it?