Almost all the possible trading relationships among Britain and the European Union following Brexit would be less favourable than remaining in the European Union, according to an influential US believe tank.
The Flanke Corporation study said the most severe option would be a “no deal”.
That would leave the UK economic climate 4. 9% poorer by 2029.
“No deal” would certainly also have a negative effect on the EUROPEAN UNION economy, but it would be “relatively minor”.
The report stated that even a “soft Brexit” involving remaining in the free market would not become as positive economically as remaining in the EU.
Rand plays a significant role in America, along with half of its funding coming from the ALL OF US government.
In European countries it has advised the UK government upon policy issues such as mental wellness, as well as the European Parliament and the Euro Commission.
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The report argues that Brexit had been likely to have a “mostly negative effect” on American interests in European countries, given the UK is a firm fically of the US in security issues and a supporter of free markets.
“An EU without the UNITED KINGDOM may be more willing to create obstacles for non-EU companies, to the detriment of US companies and the American economic climate, ” the report says.
“In the development of EU protection policy, for example , the UK aim had been often to ensure that EU measures failed to undermine NATO and the strong across the atlantic partnership. ”
That will approach could change once The uk has left the EU.
‘How much worse-off’
The Rand review said that there was only one option that will leave the UK better off outside the Eu: a comprehensive three-way free trade offer between Britain, the US and the EUROPEAN UNION.
But the report confesses that is an extremely unlikely scenario, considering the fact that the present trade negotiations between the ALL OF US and the EU (the Trans-Atlantic Business and Investment Partnership) are not backed by President Donald Trump and they are “in a hiatus”.
“The analysis clearly shows that the united kingdom will be economically worse-off outside of the EUROPEAN UNION under most trade scenarios : the key question for the UK is definitely how much worse-off, ” said Charles Ries, a vice-president at Flanke and the report’s lead author.
“It is in the best passions of the UK, and to a lesser degree the EU, to achieve some sort of open up trading and investment relationship post-Brexit. ”
Mr Ries is former US ambassador in order to Greece and was also principal mouthpiece assistant secretary of state with regard to European affairs in the US between 2k and 2004.
Although the report says that the loss of growth caused by leaving the particular EU could in part be paid for by free trade works with other countries such as India plus China, they would be difficult to implement.
“Since the EUROPEAN has a political incentive to demonstrate the fact that UK is worse off due to leaving the EU (so concerning discourage other departures), and some in the united kingdom believe the costs of ‘no deal’ are low, there is a real danger that the parties – even while trying to cooperate – will find themselves fighting to reach any agreement, ” the particular report says.
“Unfortunately for the UK, ‘no deal’ — or, indeed, any of the ‘hard Brexit’ scenarios – is the worst circumstance for the future, with significant losses with regards to economic growth. ”
The report says that many United states companies invest in the UK because it provides open access to the EU.
It argues that will foreign direct investment (FDI) continues to be boosted by 28% because of the United kingdoms’s membership of the EU.
“Our research indicates that a drop back to World Trade Organisation guidelines would reduce EU FDI influx into the UK by about $7. 8bn (£ 5. 8bn).
“If the UK signs a comprehensive FTA [free trade agreement] with the EUROPEAN UNION, investment from the EU would drop by $3. 4bn – the reduction of about 9% from EUROPEAN membership investment levels.
“Signing an FTA with the Usa would add about $3. 2bn in FDI inflows for the UNITED KINGDOM from our baseline scenario, making up regarding one-third of investment lost because of termination of EU membership. Your best option would be to conclude a three-way UK-EU-US trade agreement. ”
Rand says that once free of charge trade negotiations start, “several problem lines” could emerge among the outstanding 27 members of the EU, which might put the UK in a stronger place.
“These include the diverging interests of the countries that use the particular euro currency and those that do not really, as well as the diverging interests of those nations that are net contributors to the EUROPEAN budget and those that are net receivers, ” the report says.
“Interests could also diverge upon regional bases. Northern European countries might seek the maximum possible free motion of goods while trying to lure the particular financial industry from London for their countries.
“Southern Europe may focus on securing a high economic settlement from the UK and conserving agricultural and fisheries policies.
“And eastern European countries might seek strong protections for their residents currently in the UK. These differing focal points may come into play as trade-offs are made. ”