Labour’s plans could mitigate but not reverse economic damage to economy
New analysis out this week from UK in a Changing Europe has looked at the impact on trade that Labour’s plans for closer alignment with the EU could have. While it shows a veterinary agreement could lead to a 22.5% increase in agri-food exports and a 5.6% increase in imports, the report concedes that, in the context of the estimated two to four percent hit to GDP caused by Brexit: “Any gains from technical improvements will be relatively minimal: useful in reducing trade frictions, but not enough to really address the continuing economic impacts of Brexit.”
Still, a 22.5% uplift in food exports is better than a poke in the eye. Less trade friction would certainly ease some of the inflationary pressures on UK food supply by removing a lot of the extra cost associated with increased bureaucracy, which has to be good for British shoppers.
The report looks in more detail at what kind of agreement provisions would be needed to maintain flexibility to adapt to regulatory changes. It also explores options for mutual recognition of specific product standards and testing procedures. It’s looking increasingly likely that a veterinary agreement will serve as a potential test case for future negotiation so Labour will be keen to get legal framework right. The authors suggest a ‘supplementing agreement’ to the existing UK-EU Trade and Cooperation Agreement (TCA) which could leverage existing structures for monitoring and implementation, thus avoiding the need to renegotiate the TCA.