Unilateral free trade '˜would bring substantial benefits'

The UK economy can prosper if Britain ditches the European single market and embraces unilateral free trade in the wake of Brexit, economists have said.

By The Newsroom Wednesday, 13th July 2016, 12:24 pm Updated Wednesday, 13th July 2016, 1:27 pm

Economists for Brexit say growth will be largely unaffected by leaving the EU. Picture: Gerard Cerles/AFP/Getty Images

The Economists for Brexit group – which campaigned for Britain to leave the EU – said a unilateral free trade deal would deliver the demands of voters by returning sovereignty to the UK and allowing the nation to control its borders.

The group said economic growth will be largely unchanged by the Brexit vote and is predicting UK gross domestic product (GDP) to hit 2.3 per cent this year, before reaching 2.7 per cent in 2017 and 2018, and then growing to 2.8 per cent in 2019 and 3.4 per cent in 2020.

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It said its forecasts were based on Britain leaving the single market, taking a tighter grip on migration and benefiting from long-term unilateral free trade.

Professor Patrick Minford, co-chairman of Economists for Brexit, said: “The recent fall in sterling is acting as an automatic stabiliser for the economy in the short term, as the benefits to exports and increased wages from higher inflation offsets (the) negative effect of possible delayed investment.”

The European Union has made it clear that Britain can only remain a member of the single market if it accepts immigration from EU member states through the free movement of people rule.

Minford said an “EU-lite” model, which would see Britain remaining a member of the single market, would not deliver the same “substantial benefits and flexibility” of unilateral free trade.

He added that the plunge in the pound had already provided a big monetary stimulus for the UK economy and there was no need for Bank of England governor Mark Carney to take “rapid action”.

The group has predicted inflation to notch up to 1.3 per cent this year, before rising to 2.9 per cent next year, 3.3 per cent in 2018, 2.8 per cent in 2019 and 2.1 per cent in 2020.

Dr Gerard Lyons, co-chairman of Economists for Brexit, said: “Despite near-term uncertainty, Brexit is in the long-term best interests of the economy.

“We need to ensure we send a clear message and vision of a global Britain – and this is possible with a points-based migration system, returning sovereignty to Westminster but being outside the single market.