Hard Brexit would be good for the economy... or not?

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username1799249
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Interesting article
http://www.bbc.co.uk/news/business-40972776

Hard Brexit would be good for the economy. We could eradicate tariffs and deregulate the economy. Cheap imports would force UK companies to become more efficient and increase productivity.

Or such deregulation would see the UK flooded with cheap imports that UK companies could not compete with resulting in bankruptcies and unemployment especially in manufacturing and agriculture.

Thoughts?
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SHallowvale
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The report was published by a group which is overtly pro-Brexit. It wouldn't surprise me if bias came into it somewhere.

If more competition as a result of free trade were to force British manufacturers to improve productivity then why hasn't that happened? It's like it's forgotten that we already have a free trade area with the EU (and, by extension, countries like Mexico, South Korea, Israel, etc). Why aren't we competing successfully with, say, German or South Korean manufacturers?

Also, one-sided free trade areas would be terrible for British manufacturers. If foreign goods, likely far cheaper than our own, were to flood our market how would British manufacturers be able to compete?
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Maker
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Abolishing tariffs would leave British trade negotiators without any leverage when negotiating trade deals.Why would a country lower its trade barriers if Britain has none at all? British exporters will be handicapped if all other countries have trade barriers and Britain has none.

Britain will become a dumping ground for the cheapest stuff in the world which while it would be good for consumers would leave producers like farmers bankrupt and we would have cheap food produced in unsanitary and low welfare countries like America.
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ThomH97
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The reasoning is, as I can see:

1) Stuff from outside the EU will be cheaper for Brits to buy than EU stuff so Brits will buy that instead
2) The EU will want to have some exclusivity on free trade with us so that Brits buy EU stuff again
3) The end goal is "free trade deals with major economic blocks including the EU."

But I see 2) and 3) as contradictory. No way does the EU let us have free trade with them if we also have free trade with someone they don't have free trade with. And that's without going into the decimation of our manufacturing being undercut by producers in countries who don't provide employee rights.
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Rakas21
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(Original post by ByEeek)
Interesting article
http://www.bbc.co.uk/news/business-40972776

Hard Brexit would be good for the economy. We could eradicate tariffs and deregulate the economy. Cheap imports would force UK companies to become more efficient and increase productivity.

Or such deregulation would see the UK flooded with cheap imports that UK companies could not compete with resulting in bankruptcies and unemployment especially in manufacturing and agriculture.

Thoughts?
For me this argument is neither or there. We may see a cutthroat environment post Brexit but i don't believes outcomes pre-2030 will be vastly different to what they would have been and i don't believe our prosperity is quite as dictated by EU membership as some would have us believe.

With all that being said i will say that in a competitive market the disinflationary effects of importing goods almost always outweigh the negative effects and so long run employment should if anything increase (we'll simply see a transfer from production to consumption).
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Maker
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Removing tariffs will make manufacturers leave the country and reduce inward investment.

Cheap products coming into the country will make making things in the UK less profitable and encourages manufacturers to relocate out of the country and import back into Britain.
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MagicNMedicine
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This kind of approach would never wash with the Brexit voters in working class areas because they would not tolerate the competition from cheap imports that would come from the unilateral tariff reductions.

You would see large scale offshoring and closing down of British factories - this is what Minford means by making British firms be more competitive, and also the minimum wage would have to go as the only way to keep British jobs against the competition from cheap imports from China etc is for us to drive wages down to those levels.

The working classes of the UK who felt left behind by globalisation did not vote for Brexit to make it easier for UK firms to drive down their wages and offshore their jobs overseas so its difficult to see where the electoral support base would be for this.

Yes there will be some free market Conservatives who like this kind of vote but who is going to vote for it...? The angry Brexit working class would look for a protectionist option and it would play in to the hands of protectionist trade unionists and the left of the Labour party.

Look at how Donald Trump mobilised the rust belt against free trade deals in the US - the kind of people that the metropolitan elite don't understand, don't want their jobs to be offshored and to face competition from developing countries who like to use cheap labour.
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Maker
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(Original post by ThomH97)
The reasoning is, as I can see:

1) Stuff from outside the EU will be cheaper for Brits to buy than EU stuff so Brits will buy that instead
2) The EU will want to have some exclusivity on free trade with us so that Brits buy EU stuff again
3) The end goal is "free trade deals with major economic blocks including the EU."

But I see 2) and 3) as contradictory. No way does the EU let us have free trade with them if we also have free trade with someone they don't have free trade with. And that's without going into the decimation of our manufacturing being undercut by producers in countries who don't provide employee rights.
Removing tariffs will have no effect on the price of EU goods.
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ChaoticButterfly
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(Original post by MagicNMedicine)


Look at how Donald Trump mobilised the rust belt against free trade deals in the US - the kind of people that the metropolitan elite don't understand, don't want their jobs to be offshored and to face competition from developing countries who like to use cheap labour.
Yes but Trump was never going to do anything about it. They still voted for it. The Conservatives can say one thing and then do another once they get people'es votes. This would be almost ensured to work it the opposition was ran by liberal "metropolitan elites" who are incredibly relaxed by falling wages.

What remains to be seen is whether a left wing pro worker Labour party throws such a spanner in the works that the usual Tory tactic of taking working class people for chumps will actually work with a left wing opposition. Would Trump have won if he had been against a Bernie Sanders lead Democrat party?
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ThomH97
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(Original post by Maker)
Removing tariffs will have no effect on the price of EU goods.
Yes. But it will lead to Brits buying some stuff from outside the EU rather than from the EU, which the EU won't want. This think tank then (or pre-empt the whole thing) expect the EU to give us a favourable deal in return for us putting tariffs back on other places.
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Maker
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(Original post by ThomH97)
Yes. But it will lead to Brits buying some stuff from outside the EU rather than from the EU, which the EU won't want. This think tank then (or pre-empt the whole thing) expect the EU to give us a favourable deal in return for us putting tariffs back on other places.
Why would Brits not buy goods from the EU?
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ThomH97
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(Original post by Maker)
Why would Brits not buy goods from the EU?
Because a country that has a lower cost of living and/or less employee rights than the EU can undercut the EU's production costs. Removing the tariff on all countries means the non-EU goods become cheaper than they were, whilst EU remains the same, and in many cases this will result in the non-EU goods being purchased instead.
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Maker
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(Original post by ThomH97)
Because a country that has a lower cost of living and/or less employee rights than the EU can undercut the EU's production costs. Removing the tariff on all countries means the non-EU goods become cheaper than they were, whilst EU remains the same, and in many cases this will result in the non-EU goods being purchased instead.
People can buy none EU goods now that are cheaper than EU made goods but they still buy them even if they are more expensive e.g. BMW cars are more expensive than similar Kia cars but more BMWs are sold in Britain than Kias.
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ThomH97
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(Original post by Maker)
People can buy none EU goods now that are cheaper than EU made goods but they still buy them even if they are more expensive e.g. BMW cars are more expensive than similar Kia cars but more BMWs are sold in Britain than Kias.
I've detailed why I think Brits will buy some stuff from outside the EU instead of from the EU. Unless you are saying that Brits will continue to buy everything exactly the same despite the appearance of newly cheaper alternatives, I don't think we disagree?
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Maker
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(Original post by ThomH97)
I've detailed why I think Brits will buy some stuff from outside the EU instead of from the EU. Unless you are saying that Brits will continue to buy everything exactly the same despite the appearance of newly cheaper alternatives, I don't think we disagree?
Conversely, British workers will have to compete with the same low paid, worse conditions workers and they only way they can do that without tariffs is to have big pay cuts and work longer in shoddy conditions so they can only afford to buy the cheapest products which few EU countries will want to make.
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username1799249
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(Original post by Maker)
Conversely, British workers will have to compete with the same low paid, worse conditions workers and they only way they can do that without tariffs is to have big pay cuts and work longer in shoddy conditions so they can only afford to buy the cheapest products which few EU countries will want to make.
I'm still trying to get my head around it but is already the case. Britain doesn't manufacture mass market electronics or general goods. That is down to China. We do however manufacture high value items like cars, satellites, software, chemicals and luxury goods.

I think it is the idea of deregulation that scates me. The internet is very much deregulated and that as led to one Google, one Apple, one Facebook and one Amazon. Everyone else can pretty much do one! Regulation ensures competition if done right.
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RF_PineMarten
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This report hasn't even been published yet, it's due to be published sometime in the autumn. That means he hasn't released the methods or research data yet. So I'd treat this with a huge pile of salt until that information is released.
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