Whose Afraid of No Deal?

No deal is better than a bad deal. It's a great piece of rhetoric and in most cases it's true. In the case of Brexit it's also true. Some things are worse than a short-term economic disruption, and leaving the European Union and trading on WTO terms is better than a deal that would leave our economy permanently noncompetitive.

Incredibly, the response has been a ramping up of project fear if a ‘no deal’ Brexit were to be implemented. Suggestions that the army would be on hand to distribute food and medical supplies hit head lines just a few weeks ago. Commentators asking if we will still have bananas, or if meat can still be sold into Europe are writing attention grabbing articles. Arguments that planes won’t be able to take off at Heathrow or that nuclear waste will pile up are now common place.

Not even the blockade on Qatar around 14-months ago compares to the distopia that fear mongers paint of Brexit. Four states, Saudi Arabia, Egypt, Bahrain, and the UAE imposed a land, air and sea blockade on the small maritime, trading nation.

Qatar is by several measures more dependent on trade with its continental neighbours than the UK. Around 80 per cent of its food imports are sourced in gulf states. Understandably in the immediate aftermath of the crises there was panic and a run on supermarkets but within a day or two the government had found alternative food supplies. 

One of my of old lecturers at High school visited the region two months ago and told me that aside from the lack of white sugar and modest prices changes not much had changed. Planes have flown alternative routes, and ships now travel to different ports in Oman. Qatar saw loses in tourism and real estate but it’s adapted to change.

There are some differences between a no deal Brexit and the gulf crisis. A tariff is not a sanction, trading on WTO terms leaves the government with time to allocate funds and prepare. Second, customs will remain as frictionless as possible, the WTO’s Trade Facilitation Agreement (TFA) expects that adequately resourced nations will implement state-of-the-art technology in order that trade will not be impeded by regular stop n’ checks. 

Regardless the Brexit doom-and-gloom not only failed to materialise but Qatar grew by 2.1 per cent in 2017 according to the IMF not much change compared to 2.6 the previous year.

Far from a "crisis" Qatar disarmed the nay sayers and created for itself an opportunity. New ports, new defence contracts, and multi-million dollar projects remain in place. It’s always the countries that impose trade restrictions and tariffs that suffer the most. After we leave the European Union our story will be much the same, some industries may diversify or give way to more efficient out-sources competitors but the country at large will succeed. 

Moreover, a no deal Brexit unlike trade sanctions is something we have time to prepare for. Tariffs on imported goods that aren’t made or grown in the UK like oranges should be gotten rid of. Same with all trade barriers. Other preparations are important too, massive deregulation of noncompetitive EU directives esp. on financial services, internet and planning restrictions, replacing the BoE inflation target with a growth target and abolishing other taxes that impair economic activity, are all perfectly reasonable measures in the event of a no deal.

The problem we have, and that we’ve had from the beginning is that Theresa May isn’t interested in free markets and economic liberalisation.