Belfast Telegraph

UK Website Of The Year

Home News UK

World Trade Organisation adds new warning on economic cost of Brexit

Published 25/05/2016

The respected think-tank said a vote to Leave could see public finances take a 20 billion to 40 billion pound hit in 2019/20
The respected think-tank said a vote to Leave could see public finances take a 20 billion to 40 billion pound hit in 2019/20

A fresh warning about the potential economic cost of Brexit has been issued by the head of the World Trade Organisation, who warned import tariffs would cost the country billions.

WTO director general Roberto Azevedo said the UK would have to negotiate membership of the organisation - as it is currently represented by the EU - and trade deals with countries around the world.

The intervention came as the rival camps in the referendum debate clashed over a stark warning about the potential impact of Brexit from the Institute for Fiscal Studies (IFS), with David Cameron hailing it as the "independent gold standard" but Leave campaigners claiming it was influenced by funding from Brussels.

The WTO estimated the cost of additional tariffs on goods imports to British consumers after Brexit would amount to £9 billion, while British merchandise exports would be subject to a further £5.5 billion in tariffs.

Mr Azevedo told the Financial Times: " The consumer in the UK will have to pay those duties. The UK is not in a position to decide 'I'm not charging duties here'. That is impossible. That is illegal."

Setting out the scale of the challenge facing the UK if it voted to Leave on June 23, Mr Azevedo said: "Pretty much all of the UK's trade would somehow have to be negotiated."

Brexit campaigners have suggested that the UK would pull out of the single market in the event of a Leave win, and Britain could face being cut out of existing trade deals negotiated between the EU and other countries.

Mr Azevedo said: "It is a very important decision for the British people. It is a sovereign decision and they will decide what they want to decide. But it is very important, particularly with regard to trade, which is something very important for the British economy, that people have the facts and that they don't underestimate the challenges."

The intervention by the WTO chief follows warnings from other major international economic bodies and the respected IFS think-tank, which forecast that Brexit could lead to two more years of austerity.

The report said a vote to Leave could see public finances take a £20 billion to £40 billion hit in 2019/20, if gross domestic product is 2.1% to 3.5% lower over the period, as predicted by the National Institute of Economic and Social Research (NIESR).

It also rejected a key claim from the Leave camp that EU membership involves sending £350 million a week to Brussels which could be used in the UK.

Mr Cameron - whose policies have often been savaged by the IFS - said it was "always held out as the independent gold standard".

"What they are saying about the £350 million claim and what they are saying about the effect upon our economy of Brexit, that is very, very powerful and it backs up what the Treasury and others have been saying," he said as he arrived in Japan for the G7 summit.

Vote Leave dismissed the IFS as a "paid-up propaganda arm of the European Commission" which could suffer a financial hit from Brexit because it benefits from EU funds.

"The IFS is not a neutral organisation. It would face an £800,000 deficit if we vote Leave," the campaign said.

Ukip leader Nigel Farage told the Press Association: "They've taken loads of EU money over the last 10 years to produce a report in an attempt to frighten us. They're using our money to tell us what we should think. I think the whole thing is an absolute disgrace."

IFS director Paul Johnson told BBC Radio 4's Today programme that the think-tank received European funding for some of its "academic work" - as did other institutions outside the EU.

He said: "For the last 30 years, the IFS has built its reputation on the independence and integrity of our work and actually there is no sum of money from anywhere in the world which would influence what we said because, if it did, then the point of the IFS and the reasons ... that we are listened to after budgets and so on would simply be lost."

Andrew Lilico, chairman of Vote Leave-affiliated Economists for Britain, criticised the approach adopted by the Brexit campaign, saying on Twitter: "The IFS - for whom I used to work - is not a paid up propaganda arm of the EU. I hope that clears that up.

"Over-simplified messaging, fear-mongering & controversialism are hard-minded campaigning. Accusing folk of corruption & ill intent isn't."

Chancellor George Osborne was repeatedly challenged by Brexit-backing Tory backbenchers as he stood in for Mr Cameron at Prime Minister's Questions.

Mr Osborne told the Commons: "I don't think it's any great revelation that different Conservative MPs have different views on the European Union.

"That's why we're having a referendum, because this issue does divide parties and families and friends and we made a commitment in our manifesto that the British people would decide this question."

Andrew Lilico, chairman of pro-Brexit group Economists for Britain, attacked the Leave campaign's response to the IFS report as he insisted the body was independent.

Accusing the Leave side of "campaigning failures", Mr Lilico told BBC Radio Four's The World At One: "The statement they have made is inaccurate.

"I also don't think that a strategy of responding to serious, thoughtful economic analysis by simply playing the man and not the ball, calling people corrupt, or in other cases with the OECD, going on about expenses claims, or the IMF and attacks on them, it just seems silly to me.

"Just attacking individuals as corrupt and so on isn't sensible campaigning. I don't believe it's the kind of thing that appeals to the British public. Personal attacks just don't get us anywhere."

Former business secretary Sir Vince Cable said: " The economic case for remaining in Europe has been comprehensively made. Day after day the Leave campaign's central arguments fall apart.

"Vote Leave want to move to the WTO, but the head of the WTO has warned leaving the EU could cost the UK billions in trade and lead to years of damaging uncertainty.

"The comments from the WTO are especially important as Boris Johnson has made clear that his vision of a 'Brexit future' lies within a WTO framework."

Read More

From Belfast Telegraph