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Unilateral Free Trade Would Benefit All UK Citizens

Summary:
From today’s Open Europe news summary: Removing tariffs post-Brexit could see prices fall up to 1.2%, suggests new study According to a report by the Institute of Fiscal Studies, UK households could see prices fall by around 0.7-1.2% if the UK were to eliminate tariffs on all goods after Brexit. The report noted, “This compares with the estimated 2% increase in prices that followed the depreciation in Sterling in the wake of the referendum result. This suggests that the scale of ‘quick wins’ from running an independent trade policy is relatively small.” The report also argued that removing tariffs could “be very damaging for some UK industries in the short run.” The director of the IFS, Paul Johnson, said, “If we leave the customs union, we can come to our own trade deals with other

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From today’s Open Europe news summary:

Removing tariffs post-Brexit could see prices fall up to 1.2%, suggests new study

According to a report by the Institute of Fiscal Studies, UK households could see prices fall by around 0.7-1.2% if the UK were to eliminate tariffs on all goods after Brexit. The report noted, “This compares with the estimated 2% increase in prices that followed the depreciation in Sterling in the wake of the referendum result. This suggests that the scale of ‘quick wins’ from running an independent trade policy is relatively small.” The report also argued that removing tariffs could “be very damaging for some UK industries in the short run.” The director of the IFS, Paul Johnson, said, “If we leave the customs union, we can come to our own trade deals with other countries, we can reduce tariffs. But even if we reduce that as much as possible, the effect on prices will be really quite small relative to what is still a big cost of leaving the customs union because it would make trade with the rest of Europe so much more expensive.”

Separately, UK inflation rate fell to 2.7% in February, down from 3% in January. This is also closer to the annual UK wage growth, which was estimated at 2.8% in December.

Source: BBC News The Guardian

Despite the negative tone of this report, it illustrates that tariffs are harmful to the nation and merely transfer wealth from one’s own citizens to a few politically connected companies. By declaring unilateral free trade all UK citizens would get the equivalence of a 0.7 to 1.2% tax free pay increase. Sounds pretty good to me!

Patrick Barron
Patrick Barron is a private consultant to the banking industry. He has taught an introductory course in Austrian economics for several years at the University of Iowa. He has also taught at the Graduate School of Banking at the University of Wisconsin for over twenty-five years, and has delivered many presentations at the European Parliament.

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