The belief that the UK can go it alone defies economics, geography and the lawby Philippe Legrain / November 16, 2016 / Leave a comment
Published in December 2016 issue of Prospect Magazine
The pound in your pocket has lost 15 per cent of its foreign purchasing power since the Brexit vote on 23rd June. This is now pushing up the price of Marmite, Apple Macs and much else. While the economy slowed by less than expected in the three months to September, Britons are already decisively poorer, because currency markets believe the UK is headed for a very harmful hard Brexit in 2019.
While prime minister Theresa May glibly insists that “Brexit means Brexit,” Britain’s future relationship with the European Union could take different forms. Much depends on how brutally, or not, the UK severs itself from European Union trading arrangements, such as the customs union and the single market. “Hard Brexit” means something very specific—tearing ourselves apart from all of this.
While Conservative Brexiteers profess to be fervent free-traders, their zealotry is driving them towards a monumental act of trade vandalism. Within the EU’s single market and customs union, Britain enjoys the freest trade that exists among independent countries anywhere. Trade with the other 27 EU countries in goods and most services is unimpeded by customs controls, import duties or foreign regulatory standards. But in 2019 immigration controls and other trade barriers could suddenly sunder UK markets from EU ones, hitting nearly half of Britain’s trade.