Post-Brexit US trade deal would boost economy by just 0.16%, government reveals
- Credit: PA
The government has been criticised after claiming that the UK economy could grow 'at best' by just 0.16% following a trade deal with America.
A post-Brexit trade deal with the US is estimated as having the potential to grow the UK economy by 0.16%, according to the government's negotiating objectives.
The £3.4 billion yearly increase outlined in the document was predicted under the best-case scenario where the UK eliminates import tariffs with the States.
But if only "substantial tariff liberalisation" is achieved, then the increase estimated in 15 years was put at 0.07%, or £1.6 billion, in the governments' preliminary assessment.
The best scenario was where a "deeper trade agreement" with "full tariff liberalisation" and a 50% reduction in non-tariff measures is struck.
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Under this, real wages for workers were expected by Department for International Trade (DIT) to increase by 0.2%, or £1.8 billion.
The scenario predicting a smaller boost to the economy was based on a 25% reduction of non-tariff measures and a "substantial tariff liberalisation".
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BBC policy editor Lewis Goodall tweeted that "in economic terms that's really negligible" but added "it would be the biggest FTA [free trade agreement] available".
He added: "Given all the political flak that comes alongside it, on environmental standards for example, or accusations over the NHS, given the benefits are so tiny, I wonder if it'll ever happen."
Critics pointed towards estimates of a potentially larger hit to the economy caused by Brexit after international trade secretary Liz Truss tweeted the figures.
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Labour MP David Lammy, a vocal Remain voice in the party, said: "So now you admit the potential economic benefits of a UK-US trade deal are just +0.2% of GDP.
And the cost of Brexit is somewhere between -7.6% and -4.9% of GDP.
"In what planet does this boost wages or create jobs for anyone except the Tory cabinet?"
"This is Brexit logic," tweeted another. "Mathematically 0.2 is clearly greater than -5 so it must be better. Ask Cummings, he has educated himself to 'postgraduate level' in maths."
Twitter user @Manners7SE wrote: "It's remarkable how the government are pretending a US free trade deal is worth pursuing when their own figures show it's only worth a 0.2% kick to the GDP whilst simultaneously being so flippant about a no-deal Brexit. Completely illogical."
"Wah-hey! We get a 0.2% economic increase in NI!" wrote Midori Magma. "They get our NHS & an opportunity to undermine farmers with chlorinated chicken. Brilliant!"
"And that's the best case scenario!" posted Gary Stone. "Let's hope we don't find out what the worst case scenario is!"
Sarah Olney, Liberal Democrat spokesperson for International Trade said: "Boris Johnson has repeatedly claimed that negative impacts of Brexit will pale in comparison to the benefits. But today's analysis is clear: the gains from the best-case trade deal with Donald Trump will not come close to outweighing what we expect to lose from leaving the EU.
"The situation will be even more catastrophic if Boris Johnson sends the UK careering off a no-deal cliff edge, thanks to his self-imposed June deadline for talks. It is astounding that the prime minister is seemingly hellbent on risking UK prosperity.
"Liberal Democrats will continue to fight against the PM's damaging hard Brexit plans. We will continue to push for what is in the national interest - the closest possible relationship with the EU."
Prime minister Boris Johnson has been warned not to "cosy up" to Donald Trump in trade talks by trade union bosses who fear the deal will diminish standards in the UK.
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