Most forecasts suggest that Britain will be a poorer country after Brexit, largely because trading with the European Union will become more difficult. Such predictions about the distant future are, by their nature, open to doubt, which is partly why Brexit’s proponents feel free to dismiss them. But the same does not apply to a new paper by Meredith Crowley, Oliver Exton and Lu Han from Cambridge University, which suggests that, months before Brexit has even happened, trade is already suffering, as firms respond to the prospect of higher tariffs.
More than 100,000 British businesses export goods to the EU each year. At present they enjoy tariff-free trade with the country’s biggest export market. But all face uncertainty as Britain negotiates a new trading relationship with Brussels. Some fear disaster if the talks break down. British carmakers could face a 10% tariff to export to the EU market. Dairies might have to pay tariffs of more than 30%. These extra costs could make exporting uneconomic.