For many, the EU referendum to be held on 23 June is largely dependant on how Brexit could potentially affect UK trade. The UK has long-been a powerful symbol of trade power and the uncertainty surrounding exporting plus the potential impact on investment is worrying many voters. David Cameron, Prime Minister and Leader of the ‘In’ Campaign, has said that the UK would suffer tremendously as there are currently half a billion consumers abroad whose purchases would become more expensive over night; many believe that this would then lead them to purchasing elsewhere.
It is thought that over 40% of British goods go to the EU compared to less than 10% that come the opposite way and the ‘In’ campaign says that the UK would ‘struggle’ to renegotiate new deals whilst also having trouble securing deals with other non-EU members. However, the ‘Out’ campaign believes that the UK would have no trouble agreeing a new deal with the EU and that we could use the opportunity to trade with the United States and China. Let’s take a look at the options should the UK vote to leave in June.
Norway currently has a trade deal with the EU that allows them access to the single market, this model could be one that the UK chooses to adopt as it would allow British banks to continue business. However, there are some down sides that come with this as Norway also accept free movement of people within the EU and they also contribute funds. These funds are believed to be a similar amount to the UK currently and this is one of the reasons why the ‘Out’ campaign wants to leave in the first place.
The second method that the UK could adopt is that of Switzerland who has access to some markets after paying a fee. However, they are currently not allowed to provide financial services to countries in the EU which has meant that to do business, they have to open subsidiaries there. Do the UK banks have the prominence or the costs to be able to do this?
If the UK were to leave, the EU would be losing some significant funds and big European companies face the prospect of losing vital customers so it could be the case that a unique deal is made. Members of the ‘Out’ campaign say that German car-makers and French wine-producers, for example, would pressurise a new deal to be agreed.
In truth, any one of these (and more) options may be considered should the UK leave the EU and the ‘Out’ solution would certainly put pressure on striking deals with non-EU countries. President Barack Obama said just a couple of months ago that the UK would go to the back of the queue when it comes to arranging a trade agreement as they are currently trying to work a deal with the EU for both trade and investment. The only way we will know for certain will be if the UK does decide to leave and until then, we can only suggest various options.