LBS expert reports
on the knowns and unknowns of Brexit so far
Dubai, UAE, 05 June
2017 - The cloud of uncertainty hanging over the British economy won’t
lift until March 2019 at the earliest, according to Linda Yueh, Adjunct
Professor of Economics at London Business School.
The European principle that “nothing is agreed until everything is agreed”, means that uncertainty is likely to prevail, she wrote in a Forbes blog.
The European principle that “nothing is agreed until everything is agreed”, means that uncertainty is likely to prevail, she wrote in a Forbes blog.
Unravelling international
treaties takes time: “Less than three years from the vote to departure seems
fairly quick,” she said. “But, in another sense, it’s rather a long time to
know where everything stands in post-Brexit Britain and an EU that excludes the
UK.”
Gradually, the picture of
uncertainty is changing. Since Article 50 was triggered on 29 March 2017, more
details have emerged. Existing outside the EU won’t be easy or without cost.
The UK could face tariffs on EU imports and exports, for instance, when it
leaves the EU Single Market.
“We know that Britain will
prioritise the ability to control migration,” Yueh said. “British Prime
Minister Theresa May believes that Britain will not have unfettered access to
the EU Single Market. Rejecting the free movement of people also means the
Norway model of being in the European Economic Association is out.
“May wants the UK to
negotiate its own trade deals, so that excludes being part of the EU Customs
Union, which requires members to have a common external tariff with the rest of
the world.”
A piecemeal approach to the single market isn’t favoured by European policymakers, Yueh said. “It may violate World Trade Organisation rules.”
A piecemeal approach to the single market isn’t favoured by European policymakers, Yueh said. “It may violate World Trade Organisation rules.”
One of Britain’s
priorities is to secure tariff-free access for exporting cars manufactured in
the UK, she added. The cost of manufacturing a car in Britain could increase by
£2,370 (more than 10% per vehicle), according to a PA Consulting Group report
on the impact of Brexit.
Yueh asked whether a deal
could be done to aid the UK’s biggest manufactured goods export. The wait to
find out may take some time.