The British economy would be at most 0. 28% larger by the middle of the next decade under a comprehensive trade deal with the US, the government has admitted, laying bare the limited benefits from striking an agreement with Donald Trump.
In a document published by Liz Truss’s Department for International Trade designed to kick-start post-Brexit trade talks with the Trump White House, the government said the British economy stood to benefit from an “ambitious and comprehensive” trade deal worth a fraction of GDP, equivalent to £ 3.4bn after 25 years.
Prompting warnings from economists that the benefits would be far outstripped by the losses from crashing out of the EU, the official analysis also showed that a more limited trade deal with the US would deliver benefits to the UK economy worth just 0. % by the middle of the s, or about £ 1.4bn.
The government had previously estimated the economy would be as much as 7.6% smaller should Britain leave the EU without a deal , and about 4.9% smaller under Boris Johnson’s preferred Canada-style agreement.
Dr Peter Holmes, an academic at the UK Trade Policy Observatory at Sussex University, said: “The numbers are very small. It just goes to show how tiny the gains are from an free trade agreement with the US compared to losing our present arrangements with the EU. ”
Outlining the start of deeper talks with Washington, the UK government insisted it would not water down welfare standards or put the NHS up for sale to secure a trade deal with Trump.
In a document, published by Truss’s department, the government said it was aiming to reduce tariffs and other barriers to trade, but without compromising standards.
Overall, the government said it was seeking to achieve “broad liberalization of tariffs” and “simple and modern rules of origin”, to determine which goods can pass freely between the two markets.
Fears have been expressed that the UK is preparing to water down standards in areas including food production – allowing imports of chlorinated chicken , for example . These were intensified when Boris Johnson said in his Greenwich speech last month that such rules should be “governed by science, not mumbo-jumbo”.
But the document reiterates the Conservatives ’manifesto commitment not to allow welfare standards to be compromised.
“The government’s manifesto has made it clear that in all of our trade negotiations, we will not compromise on our high environmental protection, animal welfare and food standards,” the document says.
It also insists that NHS drugs prices will not be up for negotiation, saying explicitly: “The price the NHS pays for drugs will not be on the table. The services the NHS provides will not be on the table. ”
Jeremy Corbyn, the Labor leader, laid heavy stress during the general election campaign on the risk that drugs prices could increase significantly, after a Dispatches documentary revealed a series of meetings had been held between UK and US officials in which the issue had been raised.
The US negotiating mandate, published last year, pointed to public services as one area for potential liberalization.
Trade expert Sam Lowe said the document showed the government intended to take a robust approach to US demands that the UK drop barriers to trade in agriculture and food, including chlorinated chicken and hormone-fed beef and to its desire to get access to the NHS.
“If you consider this as an opening document in a negotiation, then it shows the UK is holding firm on the NHS and is quite strong on agriculture making promises not just on food safety but on animal welfare. So the UK is saying it doesn’t want to compromise. This means that we are in for proper negotiations not just a quick deal, so we are in for the long haul, ”said Lowe.
The document is being published on the same day that negotiations with the EU 90 in Brussels over the future relationship kick off. Truss had argued the two processes should run simultaneously, believing that would maximise the UK’s leverage.
The government stresses the potential advantages of a deal, including potentially boosting exports of salmon, cheddar cheese and cars, claiming that “removing trade barriers with the US could deliver huge gains”.