Cliff Notes – UK-EU deal tips Britain down path towards Swiss-style
- The £9bn GDP boost from the UK-EU trade agreement announced by Sir Keir Starmer translates to only 0.2% of GDP by 2040, far less than the estimated 4% negative impact of Brexit.
- Aligning certain food standards with the EU may hinder Britain’s chances of securing comprehensive trade deals with countries like the US, representing a significant shift in policy.
- The agreement suggests the UK is moving towards a “Swiss-style deal,” which involves regulatory convergence with Europe, despite government reluctance to frame it as such.
UK-EU deal tips Britain down path towards Swiss-style arrangement
The latest news about the UK-EU deal tips Britain down path towards Swiss-style arrangement, borders with a common marketplace.
There’s a trick to announcing trade agreements like the one unveiled by the prime minister on Monday: pluck out a big-sounding number and release it to the public with zero context in an effort to make this sound very impressive indeed.
Swiss-style arrangement
That’s what Donald Trump did last week when he was in Saudi Arabia and it’s what Sir Keir Starmer did on Monday, promising the agreement with the EU should generate a whopping £9bn in gross domestic product (GDP) for the UK.
Naturally, when you squint a little closer, that figure gets considerably less impressive than it first seems.
After all, by 2040 – the year the government was referring to – £9bn will equate to roughly 0.2 percent of GDP, only a tiny fraction of the negative impact most economists have estimated Brexit will have on the Economy (the OBR puts it at -4 percent).
Whether those negative estimates are any more reliable than the one the prime minister came up with on Monday is a debate for another day, but anyway, this is one of those cases where the numbers are perhaps somewhat less meaningful than the politics.
For one thing, even that seemingly small 0.2 percent of GDP is actually bigger than the calculated impact of the India trade deal unveiled earlier this month (and almost certainly bigger than any other trade deal signed since Brexit).
That’s because a small percentage of a big number is still a relatively big number, and Britain trades more with its neighbours than any other country in the world.
Anyway, more consequential than any numbers is the fact that this government has committed to something its predecessors refused to countenance: aligning certain regulations (most notably food standards) with the European Union.