Brexit has reduced trade costs

We agree, this isn’t what we normally hear but according to the Financial Times it is true. Brexit has reduced trade costs by reducing the problems of inspections, paperwork and bureaucracy at the border:

Goods entering the UK from outside the EU, which previously underwent rigorous physical or documentary inspections, are now entering with weaker checks or none at all, three agents told the Financial Times.

Of course, it’s possible to have different views about this. But that idea that Brexit would cripple trade by increasing border inspections and thus the costs of trade. This appears to be not wholly so.

A rough guide - rough, you understand - is that 50% of our trade is with the EU, 50% isn’t (that’s of the small minority of all trade that actually crosses the borders of the Kingdom of course). So, if non-EU imports are now being more lightly inspected then that makes - from the effects of trade barriers and costs - non-EU goods cheaper to us. Which is good.

Yes, yes, it’s possible to think that increasing the barriers on the other 50% of our trade is a bad idea. But then we’ve always backed unilateral free trade. Let’s lower the barriers on all.

But, Brexit means higher barriers on 50% of our trade, lower barriers on the other 50%. Are we thus evens? It’s possible to veer to the idea that we’re hugely better off. For the lower costs, the freer trade, is now with 7.5 billion of our fellow humans, the increased costs are with the 430 million left in that rump-European Union. We are, thus, about 15 times better off in our ability to trade with more people.

Which is good, you know?

Tim Worstall