Brexit has failed. The ideology behind it was about securing trade deals across the world – especially with America. As many analysts and political commentators predicted since 2016 – a trade deal with the USA was highly unlikely for all sorts of reasons – not least, Northern Ireland.
The FT reports today that – Liz Truss has admitted that a UK-US trade deal, long seen as one of the biggest prizes of Brexit, is not on the horizon, as she arrived in New York on her first overseas trip as prime minister. Brexit supporters insisted that the 2016 Leave vote would open the way for a free trade agreement with the US, which would dwarf trade deals with countries such as Australia or New Zealand. But President Joe Biden has made it clear that such a deal was not a priority and on the flight from London to New York, Truss admitted it was not on the agenda. “There aren’t currently any negotiations taking place with the US and I don’t have an expectation that those are going to start in the short to medium term,” Truss told reporters en route to the UN General Assembly.
It is yet another blow to a government whose fiscal management and decision-making has led the country to its biggest economic policy failures since 1945.
Liz Truss’s honest conclusion ahead of a meeting with American president Joe Biden in New York leaves a massive hole in the government’s post-Brexit trade strategy. It was not just a core part of Boris Johnson’s ambitions – Liz Truss was depending on it to boost her own credentials as PM – having switched sides just after the EU referendum from ‘remainer’ to ‘leaver.’
The UK’s growth rate is now critical to the Truss government and this admission and failure throws a huge spanner in the works.
It was Boris Johnson’s government that replaced Britain’s biggest trading partner, the EU, with a basic trade agreement that threw up numerous barriers. And it was only last week that HMRC confirmed that one-third of British businesses that traded with the EU have now gone out of business or are no longer trading with their EU partners.
The Office for Budget Responsibility (OBR) predicted in January last year that Brexit will reduce long-run productivity by 4 per cent relative to remaining in the EU. The OBR also predicted in it latest forecast that both exports and imports will be around 15 per cent lower in the long run than if the UK had remained in the EU. Both of these numbers are on track as are their correct assumptions that new trade agreements will not have a material impact and any effect will, at best, be gradual. This assumption, of course, excluded a trade deal with the USA – and now that promise has died its own death – the economic argument for Brexit now lies in tatters.