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The transition period has now officially ended.

Trade between UK and EU won’t ‘collapse overnight’ without agreement

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An economist has reminded those fearing the consequences of a no-deal Brexit that trade won’t simply ‘collapse overnight’ if no agreement is reached before the end of the transition period. 

Catherine McBride has noted that demand from both businesses and consumers will continue to drive trade and investment between the two sides – though that trade would likely become more expensive with the introduction of tariffs. 

She said: “The idea that trade or financial ties between the EU and the UK would ‘collapse overnight’ without an agreement is not something you would expect to read in the financial media.

“Trade agreements do not generate trade – consumer demand, and business suppliers do.

“Trade agreements can make trade easier but if consumers want to buy something, then that demand will be supplied with or without a trade agreement – even if the product is banned by the government.”

 “At the very worse, if tariffs are added to products crossing from the EU into the UK and vice versa, then EU-UK trade would merely become more expensive.

“But this would be a bigger problem for the EU than the UK because the UK is a net importer of goods from the EU. It is the UK that provides a lucrative market for EU merchandise.”

Read more: Barnier warns ‘changes are inevitable’ on release of Brexit guidance dossier

Trade negotiations are ongoing but are being hindered by the time and energy required to combat coronavirus with many rounds of talks held over conference and video calls. And while the UK government has struck a number of trade deals with smaller nations, bigger agreements with the US and also Japan, where talks have been held up with a row over cheese, are ongoing. 

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