Post-Brexit US trade deal would boost economy by just 0.16%, government reveals

PUBLISHED: 12:56 02 March 2020 | UPDATED: 15:20 02 March 2020

International Trade Secretary Liz Truss leaving 10 Downing Street, London. Photograph: Jonathan Brady/PA.

International Trade Secretary Liz Truss leaving 10 Downing Street, London. Photograph: Jonathan Brady/PA.

PA Wire/PA Images

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.

Become a Supporter

Almost four years after its creation The New European goes from strength to strength across print and online, offering a pro-European perspective on Brexit and reporting on the political response to the coronavirus outbreak, climate change and international politics. But we can only continue to grow with your support.

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.


Have your say

Send your letters for publication to The New European by emailing letters@theneweuropean.co.uk and pick up an edition each Thursday for more comment and analysis. Find your nearest stockist here or subscribe to a print or digital edition for just £13. You can also join our readers' Facebook group to keep the discussion and debate going with thousands of fellow pro-Europeans.


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".

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.

MORE: Comedian hilariously rips apart Liz Truss' cringeworthy interview over Brexit extension

You may also want to watch:

MORE: Minister who changed her mind on Brexit claims 'no-one has changed their mind'

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.

Become a Supporter

Almost four years after its creation The New European goes from strength to strength across print and online, offering a pro-European perspective on Brexit and reporting on the political response to the coronavirus outbreak, climate change and international politics. But we can only rebalance the right wing extremes of much of the UK national press with your support. If you value what we are doing, you can help us by making a contribution to the cost of our journalism.

Become a supporter

You've seen the news, now discover the story

The New European is committed to providing in-depth analysis of the Brexit process, its implications and progress as well as celebrating European life.

Try 13 weeks for £20

Latest Articles

Most Read

latest issue

ANTI-BREXIT EVENTS

Find your nearest pro-European campaigning activities, talks, protests and events nationwide.