US trade deal to boost UK economy by 0.16% over 15 years
Striking a free trade deal with the US may only deliver a 0.16 per cent boost to the UK economy over the next 15 years, failing to make up the expected loss in trade from leaving the EU, the government said on Monday.
Releasing its negotiating objectives for talks with Washington, the Department for International Trade claimed a trade pact could boost the UK economy by £15.3bn “in the long run”. The regions expected to benefit most from the deal, according to the government, are Scotland, the midlands and north east England.
The DIT said that such a deal could boost trade between 0.07% and 0.16% — prompting claims from some trade experts that the net effect would be negligible compared to the loss of trade resulting from leaving the EU’s single market and customs union. A cross-Whitehall study conducted in 2018 suggested that growth would be reduced by 2 to 8 per cent in the same period.
But a UK-US trade deal is seen by Brexiters as one of the biggest prizes from leaving the EU, strengthening transatlantic political and economic ties.
The government’s “negotiating objectives” document said the UK is focused on boosting trade for small and medium businesses. Although the primary focus of a potential deal is on goods trade, the UK is also hopeful of boosting trade in digital services and aims to strengthen ties on financial services.
The government is insistent that the UK will not open up its public services to US competition. Throughout the 180 page document, it states a dozen times that the National Health Service is “not on the table”, including the price paid for drugs and services it provides. It also seeks to maintain standards for consumers, environment and food production.
Liz Truss, the international trade secretary, said the UK will not compromise on standards in order to strike a deal. “If we don’t get the deal we want, we will be prepared to walk away, and that includes the red lines of food standards and the National Health Service,” she told the BBC.
According to the document, the UK is seeking primarily to reduce tariff barriers with the US. Trade experts said this suggested that Boris Johnson’s government has lowered its ambitions for a comprehensive trade deal owing to political constraints.
David Henig, director of the UK Trade Policy Project and a former UK government trade official, said striking a deal would be “tricky” owing to food and regulatory standards, along with the demands of American farmers.
“The UK is seeking a relatively unambitious trade deal with the US. It is definitely less ambitious than what was being talked about six months ago,” said Mr Henig. “The government appears to be just focusing on tariffs, there’s not much on financial services or services in general.”
Mr Henig added that the scope of the potential had been reduced. “No10 appears to have become worried about a US trade deal being seen as controversial. Now they’re seeking a deal, any deal, call it great and say we achieved what nobody said we could. It’s very Trumpian.”