Eyes wide open The importance of a smooth transition to a new EU - - PowerPoint PPT Presentation

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Eyes wide open The importance of a smooth transition to a new EU - - PowerPoint PPT Presentation

Sep 10, 2022 11 likes •133 views

Eyes wide open The importance of a smooth transition to a new EU deal Speakers: Carolyn Fairbairn , CBI Director-General Rain Newton-Smith , CBI Chief Economist Chair: Professor Tony Travers Thursday 6 July | 18.30 20.00 Twitter Hashtag

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‘Eyes wide open’ The importance of a smooth transition to a new EU deal

Twitter Hashtag: #LSEBrexit @LSEEI

Speakers: Carolyn Fairbairn, CBI Director-General Rain Newton-Smith, CBI Chief Economist Chair: Professor Tony Travers

Thursday 6 July | 18.30 – 20.00 Old Theatre, LSE

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THE EU IS THE WORLD’S DEEPEST PREFERENTIAL TRADE AGREEMENT

Source: “Trading off a ’soft’ and ‘hard’ Brexit”, Mulabdic, Osnago & Ruta; CEPR/World Bank 2017.

Depth of trade agreements: number of legally enforceable provisions

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UK EXPORTS HAVE BECOME MORE FOCUSSED ON SERVICES, ESPECIALLY IN EU TRADE

10 20 30 40 50 60 70 80 90 100 1999 2015

Share of total exports, %

Goods Non-EU trade Services Goods Services Services Goods Services Goods EU trade Services accounted for 40% of EU trade in 2015, up from 23% in 1999 Services accounted for 48% of non-EU trade in 2015, up from 42% in 1999

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UK IS HIGHLY COMPETITIVE IN SERVICES

Source: CBI analysis of OECD & UN Comtrade data.

  • 1
  • 0.8
  • 0.6
  • 0.4
  • 0.2

0.2 0.4 0.6 0.8 1 Insurance & pension services Financial services Other business services Transport Telecoms & IT services

UK Revealed Comparative Advantage in intra-EU and extra-EU trade

Intra-EU RSCA Extra-EU RSCA

Score of +1 implies UK accounts for all exports, RoEU none Score of -1 implies RoEU accounts for all exports, UK none Score of 0 implies export shares in UK and RoEU are equal

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SOME SECTORS COULD SEE A SIGNIFICANT RISE IN EXPORT TARIFF COSTS

Source: CBI, Heteronomics; HMRC; OECD.

8.5% 16.4% 10.5% 10.3% 3.5% 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Motor vehicles Agriculture Textiles, clothing & footwear Food, drink & tobacco Chemicals (excl. pharma) Additional tariff costs depending on UK content in exports

Average MFN tariff across all sectors is 4.3% (average MFN tariff per sector below) Billions (£)

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WEAKER POUND IMPROVED COMPETITIVENESS

Source: CBI, Industrial Trends Survey.

  • 40
  • 30
  • 20
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10 20 30 40 2004 2006 2008 2010 2012 2014 2016

ITS: Has your competitiveness improved or worsened on three months ago?

EU (lhs) Non-EU (lhs) Long-run average % balance

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NON-TARIFF BARRIERS BY INDUSTRY

Sources: CBI; World Bank.

138 133 132 118 102 85 82 76 60 52 51 41 36 22 22 20 20 9 20 40 60 80 100 120 140 160

Non-tariff barriers by sector

Chemicals (ex pharma) Agriculture Machinery Aerospace & defence

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11 222 26 62 310 100 100 510

100 200 300 400 500 600 EU EFTA FTA/Customs Union Total FTA & Single Market US Non-US Total £bn

44% 5% 12% 61% 20% 19% 100%

UK GOODS & SERVICES EXPORT BY MARKET TYPE

Sources: Making Brexit Work for British Business, Peter Sands et al.

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12 5.4% 4.3% 2.9% 8.8% 7.8% 6.2% 6.9% 4.8% 5.0%

0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 Brazil Russia Japan India China Rest of Asia Africa and Middle East US EU

Forecasts for UK goods exports over the next 10 years ($, billions) 2016 2026

IN 10 YEARS’ TIME, THE EU WILL STILL BE OUR BIGGEST EXPORT MARKET FOR GOODS

Source: Oxford Economics.