In 2014, UK exported 671,000 cars to the EU at an average price of £20,600 earning us £13.8 billion. UK imported from the EU 1,058,000 cars at an average price of £13,000 costing us £13.8 billion.
Historically, we export almost 50% of our goods to the EU and just over 50% outside the EU. Probably the bigger picture is the same: overall, we export high value goods in smaller quantities and we import lower value goods in bigger quantities from the EU.
If a 10% tariff is imposed both on exports and imports of goods between UK and the EU, one needs to forecast not only on what the change in value will be, but also what the change in volume will be. In essence what the price/volume mix impact would be.
Once the Prime Minister triggers Clause 50, negotiations will commence and let us say we reach a trade agreement with the EU by end 2019. Non-EU countries will not sign trade agreement with the UK until they know UK’s trade terms with the EU. That will take a few more years.
After all that, what the pattern of trade will be will take a few more years to evolve.
Nagindas Khajuria
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