Once more, for the back of the class: a trade deficit does not automatically translate into "they need us more than we need them". A trade deficit - at its most basic - means the UK is not self-sufficient. How that translates into negotiating power, depends on a host of factors:
What do we buy? What do we sell? How substitutable are the products or services in each case? How price elastic is demand for them? How transportable are they? What is our capability to fill the gaps in those markets? And the answers are BLEAK for the UK.
First of all our trade export-import balance sheet is significantly skewed by the fact a lot of gold has been moving through the country in the last few years. This excellent piece by @EdConwaySky explains how and why. news.sky.com/story/how-gold…
Second, you cannot add up all the trade we do with 27 countries and balance it against all the trade 27 countries do with us. 27 countries in a cooperative losing one good customer is not the same market shock as one country losing 27 good customers.
If you did want to add it all up, then you have to do so in the context of how much bigger, as a combined economy, the EU27 are. UK exports to the EU represent 13% of our entire GDP. EU exports to UK represent just 3% of their GDP. We need them, in fact, more than they need us.
Third, that's before we even look at WHAT we sell and WHAT we buy. If majority of what we export are moveable, transferrable services -insurance, for instance- unless we get full passporting, the same companies will be perfectly happy to continue selling from their new Paris HQ.
On the contrary, when we buy mostly food and energy it is fanciful in the extreme to suggest we'll just puff our cigar, make a V-sign, and refuse to buy from them. Nor can we make import tariffs low, in a targeted way, if we end up on WTO rules. They would apply to everyone.
There was a low supply of friggin salad from Spain for two weeks, due to inclimate weather, and the whole county had a near nervous breakdown. The idea that we can just switch to flying salad over from Argentina is idiotic. Most likely outcome is that we'll just pay more for it.
Fourth, we need no longer theorise about this. We've seen a round of negotiations. We've seen our PM fly to Brussels at 4am to salvage a deal and then be patted on the head by the EU27. Holding on to the notion that this reflects UK dominance in these talks is JUST. PLAIN. WEIRD.
So, please stop. Stop with the jingoistic cock-swinging. Brexit is a monumental fumble; an unprecedented act of national self-harm. Sure, it will hurt the EU. But they will cope. Because they are 27 nations working together TO COPE with precisely this kind of market shock.
The UK on the other hand, will only manage to come out of this merely badly bruised, instead of completely annihilated, if all of us -from ministers to voters- get real about our true global position and stop acting as if former allies and former colonies owe us a fucking living.
FUXAKE
