World Economy

Brexit Economists Fight Their Own Trade War

Brexit Economists Fight Their Own Trade WarBrexit Economists Fight Their Own Trade War

A schism is emerging among pro-Brexit economists over how Britain should attempt to negotiate trade deals after leaving the EU single market. The dispute could have a major effect on the future of manufacturing and farming in the UK.

Gerard Lyons–a former economic adviser to Boris Johnson–believes Britain should maintain tariff barriers on imports in order to keep some bargaining chips when negotiating trade deals with other countries, DailyMail online reported.

He also argues that the UK needs to employ transitional arrangements to protect key sectors such as manufacturing and agriculture, which could otherwise be threatened by cheap foreign competitors.

His views put him at odds with Professor Patrick Minford, his former colleague on the Economists for Brexit body and a one-time adviser to Margaret Thatcher.

Minford insists the UK should ditch external tariff barriers in order to slash the price of goods and deliver an estimated £135 billion ($174.8 billion) annual economic boost.

However, Lyons fears that such a ‘big bang’ approach could harm certain sectors and tie Britain’s hands when negotiating future deals.

Lyons told The Mail on Sunday: “The debate now is about whether you immediately go to this new framework or whether you go in a gradual way. And I think given that so many things are also changing elsewhere in the UK’s policy framework it makes more sense to adopt a gradual approach, keeping tariffs in place.” He added that Britain needs to be ‘mindful’ that adjustment could be painful.

Lyons has outlined his preference in a book co-written with fellow Brexiteer Liam Halligan, due to be published later this month. The disagreement is likely to be highly significant for farmers and manufacturers in particular.

EU farmers are protected by relatively high tariffs, so a zero-tariff policy could see a flood of imports making life hard for those working in British agriculture.

Lyons said: “Having tariffs existing in place will be a useful part of future negotiations.”

Meanwhile, British businesses grew steadily over the last three months, according to the Confederation of British Industry’s latest survey. Output was +14% in the three months to August, according to the CBI’s survey of 716 companies in the manufacturing, distribution, and services sectors. The result is similar to the three months to July, when the CBI’s growth survey recorded a reading of +16%.

The CBI expects private sector output to remain relatively steady at +16% over the next few months.

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