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In Brexit Britain, economic gravity will take its toll

10 1 0
16.12.2017

Britain looks set to get what it craves in its negotiations with the European Union. The British government has contrived a way around the impasse over avoiding controls at the Irish land border and bowed to paying more or less what the EU was demanding as a divorce settlement. Now European leaders meeting at the summit of Dec. 14-15 are expected to authorize talks over the UK’s main priority: future trade arrangements.

But just as the first phase of the negotiations has revealed Britain’s weak hand over the terms of its departure from the EU, so the next phase will reveal its weak hand in forging a favorable new economic relationship with the union.

Blame economic gravity for that. The larger and closer that economies are the more they trade with each other. The smaller and farther away that they are the less they trade with one another. This well-attested phenomenon explains the intensity of trade in services as well as in goods. That is a crucial reason why in 2016 Britain exported more in goods and services to small yet prosperous – and above all close – Ireland than to distant China, India and Brazil combined.

Economic gravity explains why leaving the EU is potentially so harmful for the British economy. Britain is set on a course that will hurt its trade with the world’s biggest trading bloc, which conveniently happens to be on its doorstep. Economic gravity also explains why it is unrealistic to expect new trade deals after Brexit with more........

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