Fools Or Charlatans? Brexit To Cost Each Family £1,000. Again

When someone releases a report which makes an incorrect assumption we can – and should, in charity – assume that they’ve just made a little boo boo. The next person to repeat the mistake should perhaps be chided gently. But there does come a point when the same politically useful mistake is made just that one too many times and we’ve got to start shouting at the charlatans. Insisting that they are spouting scrotals all the while.

We might have got there:

A “no deal” Brexit could cost UK households £1,000 a year, with the impact disproportionately felt by poorer households, according to new research.

Gosh, I wonder how they’ve reached that number?

The study by consultants Oliver Wyman suggests that whatever deal is struck with Brussels, UK household spending will rise and consumer businesses’ profitability will fall after Brexit.

Hmm, maybe, maybe:

Global consultancy firm Oliver Wyman will say that under the most negative scenario of high import tariffs and high regulatory barriers the cost to the economy could total £27bn.

Err, what?

Under a “no deal” Brexit scenario, where all imported goods from the EU were subject to World Trade Organization tariffs, the overall cost to households would be £27 billion a year, or nearly £1,000 per household.

Ah, yes, this is scrotals.

They’re assuming that trading under WTO rules means that we must charge the maximum permissible WTO tariffs upon all imports into the UK. When we’re entirely allowed to charge presicely the square root of scrote all:

To insist, meanwhile, that we must raise tariffs on the imports we desire is to misunderstand the WTO system. As a source in Geneva explains, Britain is a WTO member in its own right and will still be so even after Brexit happens. This means that we have promised not to charge higher than the allowable ceilings in tariffs upon imports from other WTO members. The Most Favoured Nation clause also states that whatever we do decide to charge ourselves, we must apply the same rate to the same products from all different WTO countries.

But not charging higher than the allowable ceilings does not commit us to charging anything at all. We can apply a 0 per cent rate (yes, I checked) if we so wish.

This also tells us what we should be doing:

Our answer to this little conundrum is and should be simple. We wish to make the consumer better off, that is the art of economic management. Therefore our post-Brexit trade stance should be unilateral free trade, the very thing which benefits consumers. Anything else is bad economics masquerading as good sense.

Well, that’s not all. We do have to start shouting that “you’re spouting scrotals” at the people from Oliver Wyman as well.

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Rhoda Klapp
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Rhoda Klapp

And if any tariffs were imposed money would go to treasury rather than direct to the EU as it does now. So, win if tariffs, win if not.

Spike
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Spike

And even if Britain taxed itself into that “worst-case” scenario, with a tiny bit of private negotiation to hand Trump something he could cast as a personal victory, the UK and the US could enter an era of tariff-free trade, both ways. The consultants again prepare a false choice assuming that Parliament after Brexit will opt for the worst of all policies.

Southerner
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Consultants seldom consult for free. Did Messrs Oliver Wyman disclose the identity of the client who commissioned the study? #FollowTheMoney

bloke in spain
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bloke in spain

You missed something very obvious there.
Let’s start with their premise that the UK will impose WTO maximum tariffs on EU goods. Cost per family – £1000. Stupid, but that defines politicians.
But tariffs are a tax & tariffs have not been charged on imports from the EU, whilst the UK was a member. And now it’s getting £1000 worth of tax from each family, that it wasn’t getting before. So, to make the move tax neutral, it just has to charge each family £1000 less tax. Reduce VAT?
Voila!

Southerner
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(y)

Southerner
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One day we get pips squeak and the next unilateral free trade. It’s a bit confusing but at least our scribe has AFAIK not yet uttered both on the same day.

Moosealot
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Moosealot

Again, running with the assumption that we would penalise ourselves as hard as the WTO permits. Further assuming (and I think this assumption is quite likely) that if the government received the money from tariffs instead of sending it to the EU it would p*ss it up the wall instead of reducing the tax burden… the figures given are still outrageously wrong because there is a second-order effect. If we apply the same tariffs to EU- and non-EU producers, there will be some amount of substitution — or at least the threat thereof — from EU-origin goods and services to… Read more »

jgh
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jgh

And following your Mercedes/Lexus example, WTO rules forbid tarriffs higher than 5%, so being “forced” to use WTO rules would force us to LOWER, yes, LOWER import tarrifs on cars from 10% as being in the EU forces, yes FORCES us to charge ourself more than the WTO allows on car imports. By leaving the EU we no longer have the ability to charge ourselves 10% on car imports, we would be forced to *REDUCE* than to 5% or less.