Watch that erode over the next two years as those businesses who can easily move does so.
E.g. consider car manufacturers. Substantial interests in the EU would love to have tariffs on imports of cars from the UK, and the manufacturers here generally are here to serve the EU market more than the UK and have little reason to remain here if they can shift manufacturing capacity elsewhere.
A lot of UK exports are "on behalf" of companies headquartered elsewhere that have used the UK as a beachhead into the EU. If the UK is outside, suddenly the benefit is drastically reduced for them.
hmm I'm struggling with this argument. So you have a trade deficit now - if UK companies (who presumably now contribute mostly to exports, not imports) move away, the trace deficit becomes larger, not smaller. Of course at some point this is really bad news for UK economy if it happens on a large scale, but it doesn't "erode the trade deficit". Maybe I understood you wrong.
Car manufacturers. You mainly mean Ford UK I assume (that's the only one I know of with a high volume)? Yes, I can see it hurting them. What I don't see is how this would be in the interest of the EU. Germany would be very much against it. France and Italy I'm not sure. The others (mostly non manufacturing countries without high stakes in the game) would most likely not want to have high taxes on one of the favourite brands.
> A lot of UK exports are "on behalf" of companies headquartered elsewhere that have used the UK as a beachhead into the EU.
Yes, I could imagine that, say for pharmaceutical companies, just not so much for the car market.
> those businesses who can easily move does so.
hmm I'm struggling with this argument. So you have a trade deficit now - if UK companies (who presumably now contribute mostly to exports, not imports) move away, the trace deficit becomes larger, not smaller.
You're right of course. I blame lack of sleep - I was thinking the balance was the other way. I'll blame lack of sleep.
> You mainly mean Ford UK I assume (that's the only one I know of with a high volume)?
I don't know about volume. But e.g. Nissan employs 6700 people in Sunderland. The purpose of the plant is mainly to serve the EU market. Any kind of tariff on imports from the UK would make it attractive for them to move it elsewhere.
> What I don't see is how this would be in the interest of the EU. Germany would be very much against it.
It would be in the interest of many EU countries to make it attractive for those companies to move their plants to a country that will remain in the EU.
> The others (mostly non manufacturing countries without high stakes in the game) would most likely not want to have high taxes on one of the favourite brands.
It takes very little to block an agreement with the UK they don't like. And it wouldn't take long to see the main relieved by making some of those companies move manufacturing to EU countries.
E.g. consider car manufacturers. Substantial interests in the EU would love to have tariffs on imports of cars from the UK, and the manufacturers here generally are here to serve the EU market more than the UK and have little reason to remain here if they can shift manufacturing capacity elsewhere.
A lot of UK exports are "on behalf" of companies headquartered elsewhere that have used the UK as a beachhead into the EU. If the UK is outside, suddenly the benefit is drastically reduced for them.