Report warns of £5.2bn tariff costs for UK firms

The report suggests the PM could use the balance of trade to her advantage
The report suggests the PM could use the balance of trade to her advantage

European Union (EU) firms will face tariff costs of almost £13 billion a year on exports to the UK while British companies will face a £5.2bn bill for sales to the other 27 states if Brexit means leaving the customs union without an alternative free trade deal, according to new analysis.

A report by the Civitas think tank indicated the importance of a deal to both sides in the Brexit negotiations and suggested Theresa May could use the balance of trade to her advantage in talks with the remaining 27 EU leaders.

On a country-by-country basis, 22 of the 27 remaining EU members would face more tariffs on exports to the UK than UK firms would be hit by on sales to those individual nations.

German firms alone would face £3.4bn in tariff costs if the relationship between the EU and UK fell back on World Trade Organisation (WTO) most-favoured nation rules. UK exporters, in return, would face £0.9bn of tariffs on goods going to Germany.

French exporters could face £1.4bn in tariffs on their products compared to UK exporters facing £0.7bn, according to the study.

Supporters of Brexit have argued that German car manufacturers and French winemakers would put pressure on their governments for the EU to strike a deal with the UK to protect the valuable British export market.

The analysis suggests the European motor industry would face tariffs of £3.9bn in car-related exports to the UK, including £1.8bn for the German automotive sector, while British exports to the remaining 27 states would face £1.3bn in costs.