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Beyond Brexit: To what degree will vital trade routes be harmed as we leave

To exchange is a human instinct, as far as we can tell we done it for as long as our species has been around.

Trade shapes our culture, our personalities and our politics. Very importantly, trade also generates wealth and jobs.

Everyday goods and services flow between the UK and the rest of the world but the 27 countries which are members of the European Union are collectively our most important trading partners.

The question is to what degree these vital trade routes will be harmed as we leave.

Dover is the main gateway for the cargo and freight that travels between the UK and the EU.

Every day, 7,000 lorries roll on and roll off ferries bound to and from the continent.

Dover is the main gateway for the cargo and freight that travels between the UK and the EU. Credit: PA

As it stands the lorries clear customs at the port in seconds but the UK is leaving the EU’s customs union and its single market.

Doing business is set to become more difficult for companies on both sides of the English Channel, and more expensive.

Perhaps significantly so.The government is dismissive of concerns about the economic damage Brexit may do.

Boris Johnson claims he will negotiate an “ambitious, deep and comprehensive” free trade deal with the EU.

In two weeks' time, we’ll find out what exactly that means when the UK publishes its “mandate” for talks, setting out its objectives and its red lines for the future trading relationship.

Later in March, the EU is expected to do the same and negotiations will begin.

The timetable is very tight. A deal will need to be agreed and approved by parliaments on both sides and then implemented before December 31 when the transition period ends.

There’s a possibility that all 27 member states will be asked the ratify the agreement.

The UK has the option of asking for more time. The government has until July 1 to ask to extend the transition period by up to two years although Boris Johnson ruled this out during the election campaign.

Boris Johnson promises 'full control of UK fishing waters'. Credit: PA

The government’s plan is to keep significant access to the EU’s markets without any of the obligations of membership. This will not be easy.

The government wants ongoing tariff-free, quota-free trade with the EU. The EU says that’s fine but in return it wants the UK to make binding commitments to march in step with some of its rules and laws - on state aid, on workers rights, on environmental protection.

Mr Johnson is currently refusing. Brexit, he argues, is all about taking back control of these issues.

There will be other potential sticking points, too. In the election, the prime minister promised to deliver “full control of the UK’s fishing waters” but the EU is demanding access for its fishing fleets.

Mr Johnson is shooting for an unprecedented and comprehensive trade deal with EU, he may end up with something more bog standard.

That would leave businesses facing customs declarations, border checks and extra regulatory compliance.

If common ground can’t be found then and the government fails to secure a trade agreement at all, then some businesses will also end up paying tariffs.

The government’s own analysis concludes that all of these “barriers” to trade would damage economic growth in the long term.

The UK wants to introduce a points-based immigration system. Credit: PA

From next year, EU citizens will no longer be able to come to the UK and go as they please.

The government hasn’t yet published the details of how its "points based" immigration policy will work.

The more restrictive it is, the more it too will damage growth.

For some firms it’s a matter of extra inconvenience and cost but for others the risks are existential.

The car industry has warned repeatedly that anything less than ongoing “frictionless” access to the EU’s markets will make the UK a considerably less attractive place to assemble vehicles.

The UK is pursuing a more distant trading relationship with the EU but much is being made of the potential for closer trade links further afield.

President Trump says the UK is “top of the list” for a trade deal with the United States. This is presented as a wonderful opportunity, the reality is likely to prove slightly different.

Trump tends to see trade as a zero-sum game, if a country runs a surplus with the US then it’s a case of “you’re screwing us”.

The UK currently sends more West across the Atlantic than we receive. This is an imbalance Trump will surely want to correct.

The NHS won’t be “up for sale” in the literal sense but the Americans will want greater access to our healthcare system and it will ask the UK to take a more liberal approach to food standards.

  • US Treasury Secretary Steven Munchin called the 'arbitrary' tax 'discriminatory'

With the trade talks comes extra political pressure, too. The government has resisted US demands to join it in a ban on the Chinese company Huawei but the pressure from Washington to ditch the Digital Services Tax, which is due to take effect in April, will surely prove irresistible.

Last week, the US Trade Secretary, Steven Mnuchin, appeared with the chancellor, Sajid Javid, on a discussion panel at the World Economic Forum in Davos.

Mnuchin made it clear that there would be reprisals unless the tax on the likes of Facebook and Google is abandoned.

“If people just arbitrarily want to put taxes on our digital companies we will consider putting taxes arbitrarily on car companies,” he said.

The rhetoric of the last three years is already making contact with the political reality.

In trade talks with the US and the EU, the UK is likely to find itself feeling stuck between a rock and a hard place. As the much smaller market there’s the obvious risk that we get squeezed in negotiations.

The freedom for the UK to strike new and beneficial trade agreements is attractive but those benefits shouldn’t be overstated.

Once again, the government’s own analysis calculates that deals with the US, Australia, New Zealand, China, India, Brazil, Argentina and many of the Gulf States would boost UK economic growth by 0.2% a year.

That's a tiny fraction of the losses we are forecast to incur in the event of a hard Brexit.