Hard Brexit could boost UK economy by £135bn a year, say top economists
22 August 2017
Quitting the EU could boost the UK economy by as much as £135bn a year, according to a comprehensive new report by a team of leading economists.
A surge in national output – worth about £5,000 a year to the average UK household – should also be accompanied by an eight cent fall in prices – adding an average £40 a week spending money for typical households raising living standards, creating new, better-paid jobs and cutting unemployment, says the report by Economists for Free Trade (EFT) to be published this autumn.
A reduction in average household bills of £2.50 a week created by savings in benefits currently paid to unskilled EU immigrants is also included in the figures.
The upbeat assessment of Britain’s post-Brexit future during the next decade is in the 50-page report by EFT, a 16-strong group of experts including professor of economics at Cardiff University, Patrick Minford, and chairman of Capital Economics, Europe’s largest macroeconomics consultancy, Roger Bootle.
In an introduction released in advance of the full report, From Project Fear to Project Prosperity, prof Minford rejects a ‘Soft Brexit’ saying that the benefits of quitting the EU will be realised only by a combination of global free trade for Britain – outside the single market and the customs union – plus opening up the UK economy to the positive effects of full competition.
He says: “Backers of ‘Soft Brexit’ say it would preserve jobs, but what they really mean is that it would preserve existing jobs by stopping competition from home and abroad.
“But aborting competition reduces jobs in the long run. Competition increases productivity and employment because higher wages paid for by higher productivity makes work more attractive. Competition also increases our general welfare because we are producing more.”
Prof Minford says the ideal solution would be a free trade deal between the UK and EU plus new free trade deals with other major economies such as the USA.
If this did not prove possible, the radical solution would be for the UK to unilaterally eliminate trade barriers, such as tariffs, for the EU and the rest of the world, making the UK the driver of global free trade.
The very threat of unilateral free trade (UFT) would put huge pressure on the EU to offer Britain a free trade deal because, if it did not, its producers, such as car makers and farmers, would have to compete in a UK market flooded with less expensive goods from all over the world.
Much the same would happen even if the UK simply obtained free trade agreements (FTAs) with key world food suppliers and manufactures keen to do so, such as the US, Australia and New Zealand.
Prof Minford says that the post-Brexit economic prospects for Britain are excellent because the drop in the value of the pound is a powerful economic stimulus, switching demand from consumers to net exports and business investments while boosting company profits.
This will help the transition to higher productivity and wages from free trade, deregulation and migration control.
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