Companies based within the European Union would be around £8 billion worse off than British firms if the UK leaves without a free trade deal, a study has found.
The figures from think tank Civitas show that EU firms would face annual tariffs of almost £13 billion, while British firms would face lower costs of £5.2 billion.
The EU’s car manufacturing industry would be especially hardly hit if European leaders cannot negotiate a deal with Britain before Brexit. Car exports from the EU to the UK would face tariffs of £3.9 billion per year, with British car exports to the EU subjected £1.3 billion.
Civitas research fellow Justin Protts, said: “These figures highlight the importance of securing a post-Brexit trade deal not just for the UK but also for the EU. European exporters have a great deal to lose if without free trade across the continent – the knock-on effect of tariffs and increased prices will harm their ability to sell to the UK.
“The UK would be better-placed to adjust for these changes. It has the opportunity on leaving the EU to alter its tariff schedule in a manner that is more favourable to UK businesses, reducing tariffs on input products for UK manufacturers and other products that are not manufactured in the UK, while keeping tariffs on goods that can be manufactured in the UK, that are perhaps not yet competitively produced.”
The study comes as an EU trade deal with Canada appears to be on the verge of collapse, raising questions over the bloc’s ability to conclude a similar deal with the UK.
The Comprehensive Enterprise and Trade Agreement (CETA) has been seven years in the making, but may have to be abandoned after a single Belgian region refused to ratify it.
Speaking last week, EU President Donald Tusk said: “If we are not able to convince people that trade agreements are in their interest… I am afraid, that CETA could be our last free trade agreement.”