Leaving EU without a deal 'would cost British exporters $7.6bn a year'

Industry News | | MIC Customs Solutions |

Leaving the European Union without a trade deal in place would cost British exporters more than $7.6 billion a year in additional costs, according to a report.

A new report has highlighted the potentially significant costs that Britain's international trade sector could face if the country leaves the European Union without securing a new trade deal first.

Analysis from the Guardian has examined the latest international trade figures compiled by the UN and World Bank, showing that the export of British goods to Europe each year is currently worth $204 billion (€193.61 billion). 

If the UK government triggers Article 50 and exits the EU after the two-year separation process is complete without having put a new trade agreement in place, it would mean British exporters would start having to pay tariffs on sales to Europe under World Trade Organization rules. Assuming the current value of British exports remains the same, this would equate to $7.6 billion in new tariffs every year.

Relatively low-margin sectors such as agriculture and car manufacturing would be hit hardest by this change, with tariffs ranging from ten per cent for cars and 16 per cent for lorries to 23 per cent on ham and 109 per cent on sugar beet.

A Downing Street spokesperson said prime minister Theresa May remains "focused on securing the best trade deal possible", but Mrs May has also previously stated that she would be prepared to lead the country out of Europe without a deal in place if the EU is not willing to offer terms her government finds acceptable.

Prof Alan Winters, director of the UK Trade Policy Observatory at Sussex University, said: "This would be a pretty big shock and it is very clearly unwelcome. At the end of the two years, it's up to the Europeans to decide if we have a deal."

Meanwhile, John Springford, director of research at the Centre for European Reform, added: "I doubt UK farmers know what's coming. There is a real risk for the average British farmer that they could be dealing with much worse trading terms."