A failure to strike a trade deal with the EU would not be a “disaster” for the UK, according to a report out today.
While an EU agreement would be “desirable” it is judged to be “not essential” by the Institute of Economic Affairs (IEA).
Instead, Britain should focus on securing a policy that would enable the nation to “trade as freely as possible with the rest of the world”.
The report also makes clear that a “no deal” situation would be better than a “bad deal”. The IEA said:
If a bad deal is offered by the EU, the UK should walk away and continue to trade with the EU under the umbrella of the [World Trade Organisation] rules rather than be hamstrung by a protectionist and costly agreement.
The paper calls for unilateral free trade after Brexit, “complemented by free trade agreements with our major trading partners”, including the US, Canada and Australia.
It noted that this arrangement would lead to lower consumer prices, increased productivity and higher wages through the elimination of all barriers to imports.
“There are many myths being perpetuated about trade policy – and more specifically about the UK’s relationship with the EU – that must be debunked,” said IEA research director Jamie Whyte.
“Many people believe that disaster will befall us if we do not forge a deal with the EU. In fact, we could unilaterally eliminate all import tariffs, which would give us most of the benefits of trade, and export to the EU under the umbrella of the WTO rules.
“Then we can seek free trade deals with all major trading partners, including the EU.”
Yesterday, the government insisted it will have made “sufficient progress” in Brexit talks with the EU by October to push on to the “next phase” of negotiations, addressing future relations.