Brexit: Trade deal with India and Kemi Badenoch: Ian McConnell

The Minister for Economy and Trade’s visit to India this week drew a great deal of attention from the media, particularly from supporters of Brexit.

As has so often been the case, one gets the impression that Brexiteers think it’s okay if they can simply drown out any mention or analysis of the cold numbers by cranking up British nationalism.

And you can understand why they think that way. While some voters fell for the fact that they were misled ahead of the 2016 Brexit vote, many people either cannot grasp the true picture, refuse to see the true picture, or simply don’t want to be told they were wrong .

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Ms Badenoch was quoted as saying by the Daily Express this week in relation to the trade deal with India and the implications of Brexit in general: “These ominous voices have been proved decisively wrong. Far from turning their backs on Britain, companies are lining up to invest here. The UK is on the rise and remains a country that others want to engage with. Global Britain is here and it is thriving.”

To give a fuller picture, the online article’s headline reads: “Significant deal proves Brexit votes wrong – Kemi hits back at Remainers.”

Oh, and there was a first hint that Ms Badenoch was preparing to “settle a multi-billion dollar trade deal with India”.

One gets the impression that the whole trade deal with India has been hyped even more because of what appears to be a universal nostalgia for the British Empire among pro-Brexit conservatives and their enigmatic obsession with the Commonwealth.

With all the hustle and bustle, you’d think that the trade deal with India would more than make up for the enormous damage the UK economy has suffered as a result of leaving the single European market. That it will more than make up for the loss of the great benefits of free movement of people between the UK and the European Economic Area and smooth trade with the EEA.

However, nothing could be further from the truth.

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One might hope that the UK government will not question its own assessment of the benefits to be gained from the trade deal with India. This assessment translates into a range of possible outcomes, depending on the depth of the deal ultimately struck, should one close.

You can imagine that one of these will be completed. The UK government generally appeared desperate and willing to give up as much ground as needed to secure trade deals in the wake of Brexit. And you can imagine that this has not escaped the notice of the governments of the countries with which the Conservatives already have trade deals and with which they want to make deals.

So what is the UK government’s numerical assessment of the impact of the trade deal with India and how does this compare to the damage from Brexit?

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This comparison might come as a surprise to many, given the pro-Brexit conservatives’ strong take on so-called ‘global Britain’.

In January 2022, the then Department for International Trade said: “A free trade agreement between the UK and India is estimated to add the equivalent of around £3.3 billion to around £6.2 billion to the UK’s GDP (gross domestic product), depending on the.” Depth of agreement compared to UK GDP projections in 2035.

“This equates to an increase in UK GDP of between 0.12% and 0.22% over the long term.” The extent of the impact is uncertain. In the long term, tariff cuts alone could reduce total UK trade with India by up to £8.9 billion (26%) and UK GDP by up to £1.4 billion (0.05%) compared to 2035 projections increase.”

Looking at the key figures of this assessment, a 0.12% to 0.22% increase in UK annual GDP is nothing special at all.

And it’s hard to imagine that this could be imagined as something to silence the “voices of doom”.

We should note in this context that the people Ms Badenoch is likely referring to are not troublemakers at all, but rather “experts” who were interviewed by Conservative cabinet member and arch-Brexit supporter Michael Gove before the referendum were dismissed at short notice in 2016.

Many people will remember that Mr Gove famously declared: “The people of this country are fed up with experts.”

Look where this attitude has taken us.

Coming back to the cold numbers, projected gains from the trade deal with India can easily be compared to the Theresa May government’s estimate of losses from Brexit. They can also be placed in the context of what the Office for Budget Responsibility, set up by George Osborne as Chancellor in 2010, had to say about the impact of Brexit on the UK economy.

Some people might have hoped that we would have made such comparisons superfluous by now.

However, we don’t have that. The Brexiteers stick to their story that their folly is a good thing economically. They make a lot of noise about trade deals that offer little benefit compared to the losses. From the point of view of public interest, it therefore remains necessary to present the cold numbers and put them in context.

Forecasts by Theresa May’s government in 2018 showed that on an average free trade deal with the European Union, Brexit would mean UK GDP would be 4.9% lower in 15 years than if the country stayed in the bloc would be if there had been no free trade agreement change in migration regulations. Or 6.7% worse on the basis of zero net labor flows from EEA countries.

For anyone who has been off-planet in recent years, the Tories have of course massively suppressed immigration from the EEA.

In March, when asked by the BBC’s Laura Kuenssberg how much stronger the UK economy would have been if the country had stayed in the EU, Richard Hughes, chair of the Office for Budget Responsibility, replied: “We believe that in the long run reduced our overall production by about 4% compared to staying in the EU.”

The latest report by Deputy Director of the Center for European Reform, John Springford, on the cost of Brexit to the UK economy, released in December, estimates that leaving the EU will reduce the country’s GDP by 5.5% by the second quarter of 2022 has.

If someone wants to give Ms Badenoch a calculator, she can calculate, for each of the Brexit damage estimates, how small the projected benefit of the trade deal with India is relative to each individual EU exit loss assessment.

It doesn’t matter if she takes the lower or upper range for the India deal’s estimated benefit or any point in it, the overall picture will be the same. India may be a huge country, but the projected impact of a trade deal with the country on the UK’s annual GDP is small compared to Brexit losses. Well, surely that should be a reality so simple that anyone can understand it.

Grace Reader

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