The rest of the EU clearly has a much bigger problem with Brexit than the UK does. They are the ones who lose our budget contributions, who need to keep access to our very lucrative market, who want full access to our successful jobs market to place more of their people who are unemployed or in lower paid work, who want to keep their surplus on public health payments, and enjoy the remittances from EU workers working in the UK.
There is likely to be strong disagreements between many member states who will want full tariff free access to our markets, and the EU Commission who want to design some kind of punishment settlement. The EU officials seem to want to prove a member state leaving wil be worse off, but would only succeed in proving the rest of the EU will be worse off if they have their way.
The strength of the UK position is its simplicity. Most of the things we want – freedom from paying contributions, control of our own borders and laws – do not require consent from the rest of the EU and are achieved by simply leaving, as we are entitled under the treaties to do. When it comes to trade we know trading under the most favoured nation status at the WTO works just fine, as that is what we do for the rest of the world at the moment. It is the rest of the EU that would suffer from the tariffs WTO allows. All our services and much of our goods exports are tariff free. Cars attract a 10% tariff, and agricultural products, where the rest of the EU sells us a lot, attract some high tariffs.
It will be interesting to see how the differences between the Commission and member states pan out in the forthcoming discussions. IF the Commission succeeds in demanding tariffs, we need to know that soon so we can get on with an early exit and establishment of the WTO system to regulate our trade. As Civitas has pointed out this week, because we will collect around double the tariff revenue from them that they will collect from us, the UK can offer tax breaks and grants in compensation so we are no worse off. The pain will be felt instead on the continent, in a futile attempt to make the EU Commission’s nasty political point.