A group of economists who backed Brexit have predicted that leaving Europe could add £135bn a year to Britain's economy.
Economists for Free Trade (EFT), formerly known as Economists for Brexit, calculate that a so-called hard Brexit would lead to a surge in national output worth around £5,000 a year for every household on average.
Sunday 20 August 2017 9:11am
Economists say dropping tariffs could force a trade deal with the EU (Source: Getty)
In the new report due to be released this Autumn, they say that output surge should be accompanied by an eight per cent fall in prices, the equivalent of a £40 a week boost.
"Hard Brexit is good for the UK economically while soft Brexit leaves us as badly off as before…hard is economically much superior to soft," said Patrick Minford, professor of economics at Cardiff University and a former adviser to the Treasury, arguing that the UK should pursue global trade deals outside of Europe.
“Backers of soft Brexit say it would preserve jobs, but what they really mean is that it would preserve existing jobs by stopping competition from home and abroad. As every schoolboy knows and every politician ought to know, this aborting of competition reduces jobs in the long run…Competition increases productivity and so employment because higher wages paid for by higher productivity makes work more attractive. Competition also increases our general welfare because we are producing more.”
The group, which also includes Roger Bootle of Capital Economics and professor of economics at Cass Business School, David Blake, also believes the UK should eliminate all trade barriers and tariffs if new trade agreements can't be made with the EU and other countries to benefit from such gains
“This is unilateral free trade (UFT) whereby we simply abolish our trade barriers without asking others to do the same. The most famous example of this was in 1846 when Sir Robert Peel abolished the Corn Laws, greatly reducing the price of food and helping to stimulate the Industrial Revolution," said Minford.
Such a move would put pressure on the EU to agree a deal with the UK "flooded" with less expensive goods from non-EU countries.
Minford said it would be "A strong incentive for the EU to do a trade deal with us – which is what we want politically".
"This is the origin of the political soundbite – ‘No deal is better than a bad deal…Free trade acts as ‘the club in the closet’ to bring the EU to a proper trade agreement with us.”
However, anti-Brexit group Open Britain dubbed such a plan "absurd".
“Unilaterally scrapping our tariffs without achieving similar reductions in the tariff rates of other countries would see Britain swamped with imports, leaving our manufacturers and farmers unable to compete. The levels of bankruptcy and unemployment, especially in industry and agriculture, would sky-rocket," said Labour MP Alison McGovern.
And other economists were not convinced by his arguements.
"One thing that professor Minford gets right is that trade boosts our living standards and the economy standards. But he ignores decades of evidence on how trade actually works, and on the benefits of trade agreements," said Dr Monique Ebell, associate research director at the National Institute of Economic and Social Research.
http://www.cityam.com/270525/group-pro-brexit-economists-says-leaving-eu-add-135bn