Civitas Report Suggests £9 billion Needed In Case of Hard Brexit
A report from a UK body known as Civitas has stated that businesses in the country would need governmental assistance to the tune of £9 billion in case a failure in striking a favourable trade deal with the EU post-Brexit. Civitas has said that this cost could be covered if the government imposes counter tariffs.
The report addresses concerns that have been raised that a hard Brexit could result in the EU in imposing hefty tariffs on UK exports, negatively impacting it. The report states that Britain after triggering Article 50 has no cause to fear if EU decides to push through tariffs for trade with UK during Brexit negotiations. Fears of a hard Brexit were not justified as the increased burdens can be mitigated with other measures.
Civitas has pointed out that several billions could be doled out to deserving industries and companies legally under the World Trade Organization rules as they adjust to the new trade regime. Support could be provided in form of £2.9 billion granted to research and development needs, £3.8 billion in regional aid as well as discretionary grants for businesses impacted by Brexit. A transition fund and reducing operating costs are other ways that the government can help businesses.
The report also urges the government to eliminate the carbon price floor mechanism that is imposed currently by the UK government to support the EU Emissions Trading System. This places an additional cost on companies with greenhouse gas emissions.
The support package from the government which would be in the range of £6.3 billion a year would be enough to compensate for likely tariffs that UK businesses could face. Civitas estimates that these tariffs could be in the range of £5.2 billion. Adding in leakages to non-affected industries would take the support package to £8.8 billion which can be covered by the £12.9 billion collected as tariffs on EU imports.
Such governmental support can go a long way in removing fears of the UK economy being impacted by unfavourable trade terms from the EU according to the report.
In a statement William Norton, the author of the report said,
The real question is not 'how soft a Brexit can we achieve' but rather 'how hard a negotiation do we wish to drive with the EU. The balance of negotiating strengths is far more favourable to the UK. If the EU27 wish to impose a self-inflicted wound by levying tariffs on British exports, Britain has little to fear
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