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Hard Brexit trade deals could take 25 years, ministers are warned

Published 27/11/2016

Prime Minister Theresa May said there were 'really complex issues' at play in the process of leaving the EU
Prime Minister Theresa May said there were 'really complex issues' at play in the process of leaving the EU

Ministers will be challenged to rule out a hard Brexit deal by senior MPs from three different parties as a new report highlighted the UK's links to the single market.

Aiming to strike new sector-by-sector trade deals with the European Union after Brexit could take almost 25 years and would risk some parts of the British economy losing out, the Centre for Economics and Business Research (CEBR) report warned.

Former deputy prime minister Nick Clegg will join Tory ex-minister Anna Soubry and Labour MP Chuka Umunna to present the findings of the research as part of their campaign for the UK to stay in the single market.

The research, commissioned by the Open Britain campaign, said: "Although it might seem theoretically possible to cherry pick a number of sectors and negotiate trade agreements for the sectors, there is considerable linkage between the sectors.

"It has taken a quarter of a century to negotiate the single market as it exists today and could take nearly as long to renegotiate a new arrangement on a sectoral basis.

"The practical problems of negotiating agreements that cover the majority of our trade would not only take years but the uncertainty thus generated would hold back investment and damage the economy."

The CEBR report continued: "A sector-by-sector approach, which seeks to prioritise or choose 'winners' in isolation of others, therefore, cannot be achieved without the risk of creating 'losers' through reduced access and reduced future mutual benefits."

The report warns that the fast-growing "flat white economy" of creative and tech businesses would be dealt a "body blow" if curbs on EU immigration were introduced.

At an event in London, former Liberal Democrat leader Mr Clegg will say: "It is the height of irony that free-market Brexiteers often claim European regulations are the product of an overbearing European super-state, when in fact EU regulations are designed to liberalise markets.

"It is ironic too that arguing to leave the single market on the basis of reducing the regulatory burden we face would in fact lead to reduced trade due to an increase in regulatory trade barriers."

He will acknowledge that "completely tariff-free trade with Europe may even be achievable outside the EU" but will assert that it is "unlikely".

" The optimal scenario, the one which opens up markets and gives certainty, is to remain within the single market," he will say.

"Completely tariff-free trade with Europe may even be achievable outside of the EU. I think it's unlikely but it is still an incredibly low bar to be setting for an economy as large, as complex, and as intertwined with Europe's as ours is.

"The challenge we are making to those who think differently is this - which sectors of our economy should be the lowest priority when it comes to negotiating a FTA (free trade agreement)? They will soon have to admit the easy answers they peddled during the campaign will not work in reality."

Mr Umunna will say: "The benefits we have within the single market cannot be replicated outside it without cost, since every alternative inevitably means increased barriers to trade.

"It would be an honest position to say this cost is worth paying for severe immigration controls or regulatory freedom or another reason to leave the EU.

"But it dishonest to deny any cost exists. In short, cherry-picking winners creates losers, and I am not aware of anyone proposing or voting for creating economic losers."

Ms Soubry will present the report as a "challenge" to those who back leaving the single market, insisting "there is no mandate for one particular Brexit option".

The report comes after shadow foreign secretary Emily Thornberry refused to rule out the possibility of Labour supporting a second referendum on the terms of the Government's Brexit deal.

Ms Thornberry was asked on the BBC's Andrew Marr Show whether she agreed people should be given a "second chance" if the economy looks like it is suffering.

She said: "I think that we need to take this in stages and at the moment we cannot even have a debate as to how it is that we are going to leave the European Union because the Government claim they are keeping their cards to their chest but we know they don't have any cards and they don't even know what game they are playing."

The Labour frontbencher was also grilled on whether she believed the UK could maintain access to the European single market while also demanding control of its borders.

She said: "It is about time we stopped talking about believing in cake, having our cake and eating our cake.

"We have to look at the options and we have to know that it is a trade off.

"We need to be able to have a proper debate within the British public as to what the options are.

"Now, do I think that too many people at the moment come into this country? I think that yes, I think they do and I think they do because I think that we have a skills shortage."

Tory MP Maria Caulfield, a member of the Brexit select committee, said: "With the shadow foreign secretary refusing to rule out backing a second referendum and suggesting no changes should be made to freedom of movement from Europe, it's clearer than ever that Labour are completely out of touch with working people.

"Only the Conservatives can be trusted to make a success of Brexit and deliver the right deal for Britain - and that must mean controls on the number of people that come to our country."

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