New trade deals
Vinay Sharma, senior trader at Ayondo markets, believes it is far more likely the economy will simply remain stagnant and defy any talk of catastrophe as negotiations are ongoing.
“However, as we eventually exit the EU, which will probably be longer than the two years given, the UK economy will probably be showing signs of decline,” he points out.
“The government will no doubt be talking up trade negotiations with non-EU nations, with America being the obvious first place to start. While these trade deals will no doubt bolster the UK economy, the completion of these deals are likely to take years, and as such, sustainable growth in the UK may be a long way down the road.”
But the UK will have to tread carefully when it comes to setting up new trading deals with countries before it has freed itself entirely from the EU.
As Mr Williams acknowledges: “EU law forbids trade-deal ‘bigamy’, in terms of enacting agreements elsewhere while still an EU member. This prevents a quick compensating tie-up with the US, for example.
“Therefore, a challenge is to remain close to the European negotiating table to maintain the best trade and regulatory deals for services, which account for 80 per cent of the UK’s gross value added. This makes it more ambitious than a Canada-style deal.”
The UK’s attempt to leave the EU is unprecedented, which explains why there is so much uncertainty regarding the prospects for the UK economy in a post-EU membership era.
While it is unsettling, as the talks progress a clearer picture may emerge of the economic outlook.
eleanor.duncan@ft.com
