£58bn: the cost of WTO trade barriers after Brexit
Brexit could cost UK companies £27 billion in “red tape” – the direct cost of new WTO tariffs and non-tariff barriers, according to a study from management consultants Oliver Wyman and law firm Clifford Chance.
And the cost for EU 27 companies would be another £31 billion – a similar absolute magnitude but about four times greater for the UK as a percentage of GVA.
The study, entitled “The Red Tape Cost of Brexit” found that if there were a customs arrangement, the costs would come down to £17 billion for UK companies and £14 billion for EU 27 companies.
About 70 per cent of the extra costs would arise from trade barriers in five sectors in the UK: financial services, automotive, agriculture, food and drink; consumer goods, and chemicals and plastics.
“We estimate direct costs will be equivalent to 5 per cent of GVA or more in aerospace, chemicals & plastics, metals & mining and life sciences, where firms are highly integrated into European supply chains. But the largest absolute impact will come from financial services due to London’s role as Europe’s financial centre and the fact that it will be hard to mitigate impacts in this sector.1
And it said that EU firms are generally better positioned to mitigate cost increases because a larger proportion of their exports are in goods rather than services. “However, mitigations are not easy and will require concerted efforts and resources in planning and implementation.”