Note: This post is written in support of an open letter to MP’s concerning FoM, the Single Market and the economic impact of choosing one over the other.
A so called “hard brexit” (a near complete severing of our links with the EU with a minimal trade deal in place) will cause economic damage of some degree to the UK further it will take the UK at least 7 years to begin the recovery. As a reminder of the timetable:
- Article 50 may not be triggered until as late as mid 2017.
- Negotiations on our exit will take therefore until mid 2019 due to the 2 year window.
- Trade negotiations with the EU will take at least a further 2 years – or mid 2021.
- At that point, serious negotiations will take place with other countries, the first deals will optimistically take a further 2 years – to mid 2023.
The reasons for this are straightforward. Article 50 must take 2 years but does not include the UK/EU trade deal, only the terms of our disengagement. We cannot severe completely our links with the EU at that point or 85% of our international trade will be affected. Optimistically, negotiations for the ensuing trade deal will take 2 years at least following the end of the Article 50 process.
Finally, and most importantly, negotiations with other countries cannot fully commence until our EU position is known, at or beyond 2021. A fundamental part of what we offer to 3rd party countries is our relationship (or lack of) with the EU and so other countries will wait until that point.
In 7 years from now the UK may begin to recover lost trade. And trade will be lost. There is no doubt that losing the single market will damage our trade with the EU and with many other countries – all in all around 85% of our trade goes through the EU or EU trade arrangements with other countries.
The only real question is how severe that damage will be, how long it will last and how long it will take us to recover our current position via new trade relationships.
Of course the UK may recover and may even surpass it’s current trade position, but that is at least 10 years away.