Date: 16 January 2017


Brexit update: and trade can thrive under WTO rules

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest Brexit news:

  • The Prime Minister will give a speech on Tuesday (17 January), providing further information on Brexit. It is all but certain the UK will leave both the Single Market and the EU's Customs Union.
  • Options for the UK's relationship with the EU post-Brexit remain a live topic. Continuing with tariff free trade on goods and agreed 'regulatory equivalence' regimes for financial services have much to recommend them.
  • If a special bespoke deal cannot be agreed then, as a default, the UK will trade with the EU27 under World Trade Organisation (WTO) rules.
  • Trade can thrive under WTO rules. Indeed, UK exports to non-EU countries which do not have an EU trade deal grew faster over the decade 2005-2015 than UK exports to either the EU (especially) or the non-EU countries that did have trade deals with the EU.
Recent UK economic news, which looks reasonably encouraging, included:
  • Mortgage approvals firmed a little in November, whilst unsecured consumer credit grew by a buoyant 10.8% (YOY).
  • Labour productivity (output per hour) grew 0.4% (QOQ) in 2016Q3.
  • Industrial production recovered in November, but construction output slipped a tad.
  • The trade balance (goods and services) deteriorated in November, but monthly figures are erratic. Encouragingly, goods exports rose 4.6% in the three months to November (QOQ).
  • The Markit/CIPS surveys for the three main sectors indicated a growth pick-up in December.
  • NIESR estimated GDP grew 0.5% (QOQ) in 2016Q4 and 2.0% in 2016.
  • The Bank appears to be raising its growth forecast for the February Inflation Report.
Ruth Lea said, 'if a bespoke trade deal with the EU for the UK on Brexit cannot be agreed, then UK-EU trade will be conducted under WTO rules. Whilst not optimal this is far from disastrous. Trade thrives for many key exporting countries under WTO rules. Commercial opportunities and growing markets appear to matter more than special trade deals.'

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Bell Pottinger:
Dan de Belder
020 3772 2561
ddebelder@bellpottinger.com

Arbuthnot Banking Group plc published this content on 16 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 16 January 2017 10:35:01 UTC.

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