Brexit: India trade deal and Kemi Badenoch: Ian McConnell

As has been the case so many times before, you get the impression that the Brexiters think it will be fine if they can just drown out any mention or analysis of the cold numbers by turning up the volume on the British nationalism.

And you can understand why they might think so. While some of the electorate have tumbled to the fact that they were hoodwinked ahead of the 2016 Brexit vote, many people either cannot grasp or refuse to see the true picture or simply do not want to be told they were wrong.

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Ms Badenoch was quoted this week by the Daily Express as follows in the context of the India trade deal and the effect of Brexit more generally: “Those voices of doom have been proved decisively wrong. Far from turning their backs on the UK, companies are queuing up to invest here. The UK is on the up and remains a country others want to deal with. Global Britain is here and it’s thriving.”

Just to provide a fuller picture, the headline of the online article declared: “Landmark deal proves Brexit ‘voices of doom are wrong’ – Kemi hits back at Remainers.”

Oh, and there was a standfirst reference to Ms Badenoch preparing to “finalise a multi-billion-pound trade deal with India”.

You get the impression that the whole India trade deal has been hyped up even more because of the seeming general hankering by Tory Brexiters after the British Empire and these individuals’ puzzling obsession with the Commonwealth.

Amid all the hullabaloo, you could be forgiven for thinking the India trade deal is going to, at a stroke, more than offset the huge damage to the UK economy from leaving the European single market. That it will somehow more than outweigh the loss of the great benefits of free movement of people between the UK and European Economic Area and of frictionless trade with the EEA.

Nothing, however, could be further from the truth.

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The UK Government would, you might hope, not dispute its own assessment of the benefits it expects to come from the India trade deal. This assessment is expressed in a range of potential outcomes, dependent on the depth of the deal ultimately concluded, assuming one is finalised.

You would imagine one will be finalised. The UK Government has generally seemed desperate, and willing to give up as much ground as required, to secure trade deals in the wake of Brexit. And you would imagine that this would not have escaped the governments of the countries with which the Conservatives have already done trade deals and of those with which they wish to reach agreements.

So what is the UK Government’s numerical assessment of the India trade deal effect, and how does this compare with the damage from Brexit?

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This comparison might come as a surprise to many, given the monumental degree of spin from Conservative Brexiters when it comes to so-called “global Britain”.

In January 2022, the then Department for International Trade said: “A UK-India FTA (free trade agreement) is estimated to increase UK GDP (gross domestic product) by the equivalent of around £3.3 billion to around £6.2 billion, depending on the depth of the agreement, when compared to projections of UK GDP in 2035 levels.

“This is equivalent to an increase in UK GDP of between 0.12% and 0.22% in the long run. The scale of impact is uncertain. Reducing tariffs alone could increase UK total trade with India by up to £8.9 billion (26%), and UK GDP by up to £1.4 billion (0.05%) in the long run, compared to 2035 projections.”

Looking at the key figures in this assessment, a boost to the UK’s annual GDP of between 0.12% and 0.22% is absolutely nothing to be shouting about.

And it is difficult to see how it could possibly be conceived as something to silence the “voices of doom”.

We should note in this context that the people Ms Badenoch is likely referring to are not doom-mongers at all but rather the “experts” who were dismissed in short order by Conservative Cabinet member and arch-Brexiter Michael Gove ahead of the 2016 referendum.

Mr Gove, many people will remember, famously declared: “People in this country have had enough of experts.”

Well, look where that attitude has got us.

Returning to the cold numbers, the projected India trade deal gains can be compared quite simply with the Theresa May government’s estimate of the losses arising from Brexit. They can also be put in the context of what the Office for Budget Responsibility, set up by George Osborne when he was chancellor in 2010, has had to say about the effect of Brexit on the UK economy.

Some people might have hoped we would have got past the need for such comparisons by now.

However, we have not. The Brexiters are sticking with their story that their folly is a good thing economically. They are making a great deal of noise about trade deals offering tiny benefits relative to what has been lost. So it remains necessary, from the perspective of the public interest, to set out the cold numbers and put them in context.

Forecasts drawn up by Theresa May’s government in 2018 showed Brexit would, with an average free trade deal with the European Union, result in UK GDP in 15 years’ time being 4.9% lower than if the country had stayed in the bloc if there were no change to migration arrangements. Or 6.7% worse on the basis of zero net inflow of workers from EEA countries.

For anyone who has been off-planet in recent years, the Tories have, of course, imposed a major clampdown on immigration from the EEA.

Office for Budget Responsibility chairman Richard Hughes, when asked in March by the BBC’s Laura Kuenssberg about how much stronger the UK economy would be had the country stayed in the EU, replied: “We think that in the long run it reduces our overall output by around 4% compared with had we remained in the EU.”

Centre for European Reform deputy director John Springford’s latest report on the cost of Brexit to the UK economy, published in December, estimates that leaving the EU had, by the second quarter of 2022, reduced the country’s GDP by 5.5%.

If someone wishes to give Ms Badenoch a calculator, she can work out, for each of the estimates of the Brexit damage, just how tiny a fraction the projected benefit of the India trade deal is of every one of the EU exit loss assessments.

It will not matter whether she takes the bottom or top of the range for the estimated India deal benefit, or any point within it, the big picture will be the same. India might be a huge country but the projected effect on annual UK GDP of doing a trade deal with it is tiny relative to the Brexit losses. Now that, surely, should be a simple enough reality for anyone to understand.