The UK economy is facing a multi-million pound blow in the event of a ‘no deal’ Brexit due to the collapse of international trade deals, the CBI is warning.
With the prospect of a ‘no deal’ exit from the European Union on 29th March appearing ever more likely, the CBI is highlighting the damaging implications for UK businesses of crashing out of the trade deals EU membership provides.
The UK currently benefits from extensive trade agreements as an EU member, spanning around 70 countries. The CBI estimates the total amount of global GDP covered by the EU and the countries it has trade agreements and partnerships with to be 37%.
In the UK, exports to countries with EU free trade agreements are worth more than £41 billion every year, accounting for more than 13% of the UK’s exports.
Through these agreements, the UK exports goods worth £5.8bn to South Korea, £4.9bn to Turkey and £4.8bn to Canada each year, with the machinery/transport and chemicals/pharmaceuticals sectors among the most exposed.
If the UK leaves with ‘no deal’, these exports risk having immediate tariffs imposed overnight, costing the economy hundreds of millions of pounds.
Ben Digby, CBI Director of International Trade and Investment, said:
“If the UK leaves the EU without a deal, overnight businesses could cease to enjoy the benefits of tariff-free trade with, and easy access to, crucial markets for products and services, from Canada to South Korea.
“Many firms are unaware it is not just their relationships with EU customers at risk from a no deal Brexit, but relationships across the globe.
“Despite the work of Ministers and trade negotiators, individual businesses trading with markets outside the EU would face tariffs worth millions of pounds being slapped on them instantaneously. These trade deals span five continents and are vital for the smooth export of our goods and services.
“Exports to countries with EU free trade agreements are worth more than £41 billion to the UK every year. The risk to these deals is an overlooked danger to our economy and yet another reason why no deal is not an option for the UK and jeopardises jobs in our communities.
“It is vital no deal is taken off the table in order to unlock transition and allow the UK to remain part of these deals. We also want negotiators in these countries to come to the table to ensure continuity.
“Most importantly, compromise must be shown on both sides of the Channel and politicians must work quickly to come to a deal.”