Brexit

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That is why a careful empirical study indicates that a move from membership of the European Economic Area to a mere FTA could lead to a huge reduction in the affected trade. In all, UK trade may shrink by up to a quarter in both services and goods. Because of distance and regulatory barriers, agreements with the US, other “Anglosphere countries” and leading emerging countries would not offset this: according to the NIESR’s Monique Ebell, these might increase overall UK trade by only 5 per cent.

Five Brexit challenges as Britain leaps into the unknown

The advantage of the larger economy is even greater when it comes to non-tariff barriers, which often result from differences in regulations and standards among trading countries. In most cases, the smaller country must simply accept the larger one’s rules. Given this, Brexiteers are wrong to claim that the UK, as a net importer, will be in a strong position in trade negotiations with the EU. What counts is relative size, not net trade flows. Multiple studies confirm this, concluding that the UK will bear the lion’s share of the costs of Brexit.

Brexit in a Brave New World by Daniel Gros - Project Syndicate