Kiel Institute President Gabriel Felbermayr considers the timetable for a free trade agreement between the EU and Great Britain to be unrealistic. In the event of a no deal, he said, the EU would have much to lose, especially its negotiating power on the international stage.
Prof. Gabriel Felbermayr, Ph.D., President Kiel Institute: “The timetable for Great Britain and the EU to negotiate a free trade agreement is extremely ambitious and cannot really be achieved by 2021 or even 2023. The great uncertainty as to what the Brexit really means in the end for relations and for companies in both economies remains. The UK is in a good negotiating position vis-à-vis the EU. From the EU’s point of view it weighs very heavy, that without close ties to the UK it would be a weakened third party in the new systemic competition between the US and China and would lose considerable negotiating power.
The economic weight of the British corresponds to that of the 19 smallest EU members put together. The EU must therefore make every effort to keep Britain in the single market, because access to it is its biggest asset in international negotiations. To do so, the EU must also be willing to abandon its dogma of the inseparability of the four freedoms—free movement of goods, services, capital, and persons. The larger the single market, the stronger the European voice in the world.
Also, the UK has put forward a convincing low-tariff strategy in the event of a no deal, and the country exports mainly services on which no duties are levied. The economic damage of a no deal would be roughly the same on both sides in percentage terms, and the UK would hardly suffer more economically than the EU. Furthermore, Great Britain will probably build up additional negotiating pressure on the EU through a free trade agreement with the USA and further deregulation and tax cuts.”