Aspects for a post-Brexit Trade Deal

Aspects for a post-Brexit manage DealWhat are the most important aspects ofa post-Brexit parcel out deal with the EU, from a UK perspective? Brexit, the abbreviation of the two words Britain and Exit, is the result of the June 23rd referendum in 2016 which decided the fate of Britain and its position to leave the Economic and political union the European union. The unexpected result led to the sudden turmoil and uncertainty of the proximo of Britain and let to the resignation of the then current Prime Minister David Cameron, and the subsequent pin tumbler in the countersink of the Pound to its lowest level in 30 Years (Connington, 2018). In this essay, I get out help ascertain and breakdown the impacts that Brexit leave behind have for Britain, mainly focusing on trade and how this will affect non only consumers and businesses, but the economy as a whole. From there, alternative trade models will be analysed to help decide a viable future that has Britains best interests at heart, before coming to a conclusion. The EU and peck Theory switch over is theaction of how economic partners interact with each other while exchangingcommodities. (Economies of Trade 1970-1979). The European union is based on the propositionof lighten Trade an argument proposed by David Ricardo a 19th centuryEconomist who first developed the thought of comparative advantage whereby eachcountry produces what it specialises heedless of its absolute advantage, thusas a result world output is increased, and each country benefits the most itcan out of the situation. Free trade encourages economies of surpass and reducesthe formation of oligopolies due to market liberalisation and the ability tosell to a wider market outside of their domestic space. Current EU implicationsThe make toleave the EU, is a long and arduous one, taking many years and possibly even aslong as a decade before the process is complete, during that prison term the UK can console take advantage of its benef its until new terms and conditions are met. TheEU, taken as a whole is the UKs largest trading partner. In 2016, UK exportsto the EU were 236 billion (43% of all UK exports). UK imports from the EUwere 318 billion (54% of all UK imports) (Ward and Webb, 2018). Evidently thisis hugely significant as the UK relies on its trading strengths with the EU tobe able to acquire and sustain its economy. The EU has over500 million people living in it, and accounts for 23% of the global GDP. Over adecade (1993-2003) the free market accord has expanded the EUs GDP by over588 billion, this equates to 3,819 extra income per household (Webarchive.nationalarchives.gov.uk,2018). The Free movement of people act, has created the emergence of a limbereconomy. Labour pifflingages, for example the manual jobs in Ireland and UK havebeen met due to the migration of eastern European workers. Migration has aidedcountries to reach productive capacity preventing wastage of raw materials,these migrants are very much young people who are less of a drain on the health serviceand can contribute to the tax revenue of the host country. EU migrants cost theUK government 408.12 per second in public expenditures and contribute 463.35per second in revenue (Dustmann and Frattini, 2014) this figure is set to revolt as to a greater extent and more than educated migrant workers choose to work in the UK, aprospect now able to happen with the help of the Erasmus programme., wherestudents can complete studies abroad and be able to utilise previousqualifications in the UK where they will be recognised universally (Webarchive.nationalarchives.gov.uk, 2018). The possibility to study abroad is consideredpositive by 84% of EU citizens Furthermore, inward investment grew by almost 8xin just over a decade reaching 106.5 billion the UK now being the 5thlargest initiation of inward investment and its attractiveness from Japanese firmslargely being created by its involvement in the unity market. However, t here isan opportunity cost in the UKs involvement in the EU, and subsequentdrawbacks. Firstly, the UK contributed in 2017 a net contribution to the EU ofan estimated 8.9 billion (Keep, 2018). This in simplest terms means the take upmonetary value the EU receives from the UK is less than we receive thisimmediately presents a large opportunity cost that could be better spentelsewhere. This leads onto the fact thatin order to collapse such a large sum of money, the government will have toraise it from most plausibly consumer and corporate taxes, as of today spendingper capitulum is currently at 126 per capita (BBC News, 2018). Inefficient policiesare another criticism EU membership faces.Around 40% of the total EU Budget is spent on the common agriculturalpolicy (EPR Service, 2018), which ensures farmers continue to produce andsurvive through two volatile weather and market conditions this is mostly donevia annual get off payments., the setting of nominal product prices, the b uyingof any over-supply and the setting of import tariffs. This has caused farmersto produce far more than is necessary, with prices remaining at a set minimumand eventually the EU having to purchase the oversupply, this has led to anincreasing budget with it now totalling 200.2bn,the period 2014-2020 with the UK receiving 20bn over the course of the seven-yearperiod (Civitas pioneer for the Study of Civil Society, 2018). Consumers, curiously on lower incomes are faced with now having to purchase farm goods atset minimum prices, even if there is over supply make income inequality. The annual cost ofthe burden EU regulations has brought to the UK now stands at an estimated7.4bn per annum. Red tape regulations have severely taken away the sovereigntyof individual conclusion making from host countries., even more so by theintroduction of Qualified Majority Voting, a process by which decisions canbe make often against the public interest of a particular country, for example,in EU d ecision making, Luxembourg has one vote for all(prenominal) 200,000 inhabitantswhist for Germany to get the identical number of votes, 8 million people are needed (Euro-know.org,2018). The current alternativesThe Governmenthave a tough decision to make in the process of leaving the EU, it is paramountthat the UK still benefits from many of the EUs current offerings to stay private-enterprise(a). There are two options, adopt existing trade human relationship models orcreate a bespoke model. The first option,is the Swiss model, whereby bilateral agreements have been negotiated betweenthe EU and Switzerland. This entitles the country to be a part of the wizardmarket for goods, but not services. Switzerland also has to negotiate extremelyfrequently with the EU, regarding matters such as the 2014 immigration quota,to ensure Switzerlands rules are in kris with the EUs from enforcement viathe European court of justice. London accounts for 51% of the financial serviceincome for the UK economy (Tyler, 2018), so entering into an agreement with theEU that does not pass on for it to be part of the single market for services isextremely unlikely as it would damage the economy of thecapital far too greatly. The joining of the customs duty union, much like Turkey has done, comes with the same drawbacks as theSwiss arrangement. Not only would the UK not have any access to the servicemarkets, but it would not have any in the setting of the tariffs it is boundto., furthermore any arrangements the EU forms with other parts of the worldwould remain inaccessible. A perhaps morelikely situation, however not without its problems is a Free Trade Agreement. Afree trade agreement is simply an improved version of the World TradeOrganisations rules i.e. lower tariffs. However free trade agreements such asthe Canada template offer very little access to the service market, and do notset our regulatory procurement guidelines for the country to follow. If the UKwas to somehow create a more developed agreement, EU member nations wouldinsist on ensuring the UKs adoption of European rules. Furthermore, The of late leaked UK government analysis concludes that, under such a deal, UKgross domestic product might be 5 percentage points lower than it would otherwise be, after 15 years a loss of about a fifth of the potentialincrease in output by that time (Tyler, 2018). Trade under theWTO rules would mean that the UK would be subject to the common externaltariff. and UK firms would lose their comparative advantage. Domestic firmssuch as the construction, aerospace and retail would find costs would risedramatically causing cost push inflation for the consumers. Even though thataccounts for only 20% of the UKs GDP, it is still a dramatic effect. The WTOhas also make very little progress in the deconstruction of the EUs serviceindustry, so again free market access for the UK would be hindered. trim Models The cake and eatit model was first proposed by Boris Johnson and The resa May. Its focus was ona deal that allowed preferential access to the EU market, but with clearcompromises over issues like immigration and the role of European Courts (Ft.com,2018). This model would allow the UK to benefit from both goods and servicesfree trade, be able to help cut the detrimental red tape bureaucracy that iscosting the UK economy almost 8 billion a year and banish membership paymentsto the EU. Its success however was short lived, Brussels chief negotiatorMichel Barnier told a conference in the Belgian capital that the EU wants tooffer its most ambitious free trade agreement to the UK but warned that therewas no question of Britain cherry picking elements of the single market whichit wanted to keep (Porritt, 2018). The Florence Modelrefers to the dialect that Theresa mays speech and proposed options given inSeptember 2017. The model outlines that the UK will ensure that payments intothe EU budget up until 2020 will still be paid as salutary as honouring anyc ommitments in that time. EU citizens living in the UK and vice versa, willhave their rights protected and the European Court of Justice will still haveconsiderable weighting. Canada plus model followsthe same ideas as the Comprehensive economic and Trade Agreement i.e. theCanada model, however it has been altered and expanded to cater for the UKsneeds. The removal of goods tariffs, access to the single market is granted,but at the same time control of immigration rules and not having to contributeto the EUs budget. Theresa may hailed this model quoting This agreementshould allow for the freest possible trade in goods and services betweenBritain and the EUs member states. It should give British companies themaximum liberty to trade with and operate within European markets (Martin,2018). The final bespokeapproach is a strongly mitigated no deal. This is whereby no deal is reached,and both parties cannot come to a compromise, instead the UK would no longerhave access to the single ma rket and trade under WTO rules. Oxford economicshave recently published that his would be a detrimental outcome, and the UKstood to lose an estimated 75bn in trade directly from exports and another50m from supply chain impacts by 2020 (Supply Management, 2018). Thegovernment is looking for every possibility to not adopt this model, howeverwith the looming 29th of march 2019 getting closer, with the EUrejecting appeals to extend it, it may be an option that the UK is forced totake. Conclusion The UK is in adifficult position, with the UK economy almost completely founded on theservice sector currently, it is vital that a deal can be met that allows foraccess into the single market in terms of services. Secondly, with the UK beinga consumer nation, with very little manufacturing, the retail and food industryrelies upon the current EU agreement to maintain competitive price and supplylevels. Without this, the consumer would be faced with ever increasingexpenditure on goods, as the UK i s forced to pay tariffs. Whilst currentimmigrants living in the UK will have their rights protected future immigrantsand their ability to work and live in the UK is uncertain. This could impactskills transfer into the UK economy and lead to future labour shortages.Foreign direct investment is another big issue, with many foreign firmslocating to London in order to benefit from access to the single market, ifthis was taken away, attractiveness of future and current firms in London willbe diminished potentially leading to relocation. Swiss Banking Giant UBS hasrecently stated that As many as 15% of EU companies with operations in Britainplan to move all of their UK staff out of the country after Brexit (Martin,2018) The two-scenarios looking most likely (Switzerland/Canada) are not thebest situation for either the UK or the EU, on the on hand, moving towards aSwitzerland type approach creates a loss of republican control, whilst taking aCanada route, would mean restriction of market access, therefore a balancebetween sovereignty and EU laws needs to be met to be in the best interests ofthe UK. Word Count 2192 Reference List(Connington, 2018) Connington,J. (2018). From $5 to $1.22 the 200-year journey of the pound against thedollar. online The Telegraph. getable athttps//www.telegraph.co.uk/money/special-reports/from-5-to-122-the-200-year-journey-of-the-pound-against-the-doll/Accessed 3 Apr. 2018.Ward, M. and Webb,D. (2018). 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