Post-Brexit FTAs: Who benefits?
Episode one: farmers versus finance (well, services, but that doesn’t sound as exciting)
I keep hearing/reading a lot about the UK’s future trading relationship with the rest of the world and how everything is going to be great. I’d go as far as saying that taking to the seas was, and continues to be, one of the key tenets of the Leave campaign.
The idea any of this will happen any time soon is ambitious to say the least (as is the idea new trade deals will make up for the losses of Brexit) but in order to make a more general point I thought it would be interesting to look at one specific proposal, as put forward by Shanker Singham in the Financial Times:
Now, let’s assume that in the long-run — say, 20 years — this approach does lead to an overall aggregate gain for the UK economy. It leads to cheaper food for consumers, and opens new markets and opportunities for our productive service exporters.
Great.
However, we need to be honest. The UK farming sector is already struggling. Reducing its protection and/or subsidy, will likely lead to many farmers going out of business. This problem is particularly acute for those farmers reliant on grazing livestock — cows, sheep and the like — and what with dairy prices struggling to recover things are not looking so good for dairy farmers either.
The map below is slightly old, but gives a good indication of where cows are in England. You will notice that there are not many cows in London. London does, however, host a lot of service providers that could stand to benefit from this new arrangement — banks and the like.
London overwhelmingly voted Remain.
Coincidently, it seems that the vast majority of Remain voting areas in England do not host many cows.
Thus, my incredibly crude analysis leads me to believe that if we are to follow Mr Singham’s advice, the aggregate gains in this one vision of the UK’s new free-trading future will largely accrue to businesses in cities such as Remain voting London, and the losses fall on farmers and dependent industry in areas that voted Leave.
Bring on those sunlit u̶p̶l̶a̶n̶d̶s̶ Remain voting cities.
