What are WTO terms and how will they affect the UK in the event of a no-deal Brexit?

Should the UK leave the European Union with no-deal, we would be subject to the terms of the World Trade Organisation (WTO).

Brexiteers have been advocating this route, believing it represents the purest Brexit and would be best for Britain.

But what are the WTO terms and are Brexiteers right to promise a better future for the UK under these rules?

  • Will WTO tariffs put prices up?

The WTO deals with global trade between 164 countries, representing 98% of world trade with the goal of ensuring trade flows as smoothly and freely as possible.

Each member sets their own tariffs - or duty - on goods coming in from abroad, as well as quotas on how much of each product can be imported.

Countries within the EU set one uniform tariff for goods coming into the bloc from outside it.

Those tariffs vary depending on the industry, so if the UK were to trade with the EU on WTO terms it would mean our manufacturers paying an export tax on electrical machinery of 2.5%, but it would be 10% on British cars and for our cheese and dairy farmers the export duty would be almost 36%, which would be felt by the British consumer.

As EU members, the UK currently does not pay tariffs on EU goods going out or coming in.

The UK could chose to lower or waive tariffs on imported goods to try to stimulate free trade with the EU and bring down prices for consumers, but under WTO rules that would mean lowering tariffs for all countries - potentially flooding the market and undercutting our own producers.

  • What will the impact on jobs be?

A recent study from the UK Trade Policy Observatory at Sussex University estimated a no-deal Brexit could cost up to three quarter of a million jobs - that's about 2.5% of the total job market.

Many Brexit supporters like Jacob Rees-Mogg claim switching to WTO rules would be much better but no country in the world trades exclusively on WTO terms - all 164 member countries have negotiated better access to at least one market.

But trade deals are both highly complicated and lengthy.

The EU's most recent trade deal, with Japan, came into force this month but took six years to complete. A no-deal Brexit could mean trading on less favourable WTO terms for many years to come.