Macroeconomics: UK economy, IB Economics

Who would have thought it? Britain's post-Brexit trade deals are seemingly tantamount to worthless, and will only have a tiny effect in the next few years. So whereas the Office for Budgetary Responsibility (OBR) estimates that Brexit is likely to cost the economy £100 billion, our membership of the Comprehensive and Progress Agreement for Trans-Pacific Partnership “could lead to an increase in UK GDP of £1.8bn in the long run”  Wow! 

It seems that the UK is about to conclude a free trade deal with Australia, which will, no doubt, be trumpeted as a triumph of the first order.

And despite the relatively small amount of the trade we do with Australia, it may well be in that it might signal that the UK is going to be quick to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) - in essence, a Trans-Pacific free trade agreement - which would give us tariff-free access to this market.

That said, there are still concerns, not least from agriculture abut the distributional consequences of this. 

And here's what the CPTPP is: a nice BBC explainer of the regional economic grouping. 

Yesterday's news, I guess. However, Britain is looking to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), made up of 11 nations, including Australia, Canada and Japan.

Now can someone explain to me why the benefits of free trade with this bloc outweigh the benefits of free trade with a regional economic grouping on our doorstep?

Instead of having tariff free trade with our closest neighbours in geographic terms, we are looking to strike a free trade deal with the Asia-Pacific region. 

Britain is applying to join the Asia-Pacific CPTPP trade treaty building on its ongoing negotiations with Australia. Again, whilst I fully grasp the implication that the centre of economic gravity is shifting in that direction and it makes sense to have skin in the game. the reality is that geographic proximity is, empirically, a massive determinant of trade patterns, and I, for one, can only see the notion that free trade with one bloc but not another is hypocrisy of the first order. 

Is there life post-Brexit? Yes, apparently, with the UK applying to join the newly-created CPTPP in the Asia-Pacific region. The free trade area currently has 11 members, and many of them are relatively fast growing. 

However, at present we don't do an awful lot of trade with many of them - however, that might be on the point of changing.