Exposed: How the EU CAN'T afford to start a trade war with its ‘Treasure Island’

As Brussels prepares to ‘go nuclear’, we reveal EU's decade of £2.35 TRILLION goods sales to UK

Montage © Facts4EU.Org 2021

If the EU starts a trade war, they will put economies and hundreds of thousands of jobs at risk

On Friday afternoon in Brussels, the EU threatened the United Kingdom with “serious consequences” if the UK goes ahead with its plans to protect Northern Ireland in the next three weeks.

“Let there be no doubt that triggering Article 16 – to seek the renegotiation of the Protocol – would have serious consequences.”
- EU Commission Vice-President Maroš Šefčovič , Brussels, Fri 05 Nov 2021

Is the EU preparing to go on the warpath?

Unsurprisingly, the Brussels machine has been war-gaming its response options, should the UK invoke Article 16 of the Northern Ireland Protocol at the end of this month. In these circumstances the hardliners in the EU Commission are determined to teach the British a lesson, by moving as rapidly as possible to the ‘nuclear option’ of suspending all or part of the UK-EU Trade and Cooperation Agreement (TCA).

We understand that the EU Commission is exploring all options at its disposal to punish the United Kingdom, from those contained in the TCA itself to other, seemingly dubious (from a legal point of view) courses of action. For its part, the UK Government recently started a rapid recruitment drive for more lawyers experienced in international relations.

But can the EU really afford to put its UK trade at risk? Facts4EU.Org punched the numbers

These days international trade is a complex business, governed by agreements that often stray far beyond the mechanics of trade into all manner of ‘standards’ and ‘values’ which have almost nothing to do with the goods being traded.

That said, here is the cold, hard truth for the EU of what it would be putting at risk, if it chose to start a trade war with the United Kingdom – its ‘Treasure Island’.

Brexit Facts4EU.Org Summary

EU goods sales at risk in an EU Commission-invoked trade war
Last 10 years – 2011-2020

£2.35 trillion of EU goods sales to UK in last 10 years (£2,348,443,000,000)
The EU has been selling 52% more to the UK than it buys
£808 BILLION surplus on its trade with the UK in last 10 years (£807,763,000,000)

[Source: Office for National Statistics – latest trade report.]

Which EU countries would be most affected by an EU Commission-invoked trade war?

Facts4EU.Org looked at which EU countries sell the most goods to the United Kingdom. Clearly these countries will be more affected by any EU Commission action and might therefore be assumed to take a keen interest.

Below we show the EU’s top 10 suppliers to the UK. We have used the figures for 2019, which was the last year unaffected by the Covid crisis.

Brexit Facts4EU.Org Summary

EU countries most at risk in an EU Commission-invoked trade war
Goods sales to the UK, 2019 (pre-Covid)

Germany: £65.6 bn
Netherlands: £42.9 bn
France: £31.4 bn
Belgium £26.1 bn
Italy £19.8 bn
Spain £17.5 bn
Ireland £13.8 bn
Poland £11.0 bn
Denmark £6.6 bn
Sweden £6.5 bn

[Source: Office for National Statistics – latest trade report.]

Achtung, achtung

The largest goods exporter to the UK has always been Germany, by far the EU’s largest economy. Recently, however, the EU’s economic powerhouse and biggest contributor to the EU’s budget by far, has been experiencing some difficulties.

Production output as a whole in Germany is falling, retail sales continue to fall, and inflation is now running at 4.5%.

For Germany, the largest single product group it sells to the UK is of course motor vehicles, particularly cars. It is Germany’s car industry which is particularly suffering, due to supply chain difficulties and other factors. (One of these is the shortage of HGV drivers in that country - not something readers are likely to hear about on the BBC.) For Germany the motor industry is a significant part of the economy, representing 10% of GDP.

Observations

No-one yet knows for certain how the negotiations between Lord Frost and EU Commission Vice-President Šefčovič will end up. However, being seasoned observers of the EU seven days-a-week for many years, we would be simply staggered if the EU were to acquiesce to the perfectly reasonable proposals laid out by Lord Frost in his Command Paper sent to the EU in July. This was rejected by the EU within 24 hours.

Faced with incontrovertible evidence that the Northern Ireland Protocol is not working, the Commission had no real choice but to offer some concessions. As Lord Frost has made clear, these do not go nearly far enough.

The UK versus the EU ideologues

For the EU to accede to the changes needed for the Protocol would – in our view – be politically and ideologically impossible for them. Apart from anything else, they are immensely proud of the way in which they got Theresa May to accept the broad principle that the price of Brexit would be to lose, de facto, Northern Ireland. In this, it must be said, they had the willing cooperation of a large number of anti-democratic MPs in the UK who refused to accept the decision of the people in the largest democratic vote in British history.

Lord Frost has been clear that profound changes must be made in order to preserve the peace and the constitutional integrity of Northern Ireland as part of the United Kingdom. The case for invoking Article 16 is beyond doubt. If the EU make no significant moves this week or next, as we expect, then it is becoming hard to see how the British Government can fail to act.

The realpolitik facing the UK Government and the economic damage facing the EU

Facts4EU.Org has always published its clear view that the Withdrawal Agreement was an abomination and that the TCA failed on so many levels. Our preferred option was always to leave on WTO terms. This was something which the anti-democrats in Parliament, abetted by fanatical campaigners funded by foreign money, prevented by court action and by disgraceful behaviour in the House of Commons.

Our report above shows what the citizens of the EU have at stake in the event that the EU apparatchiks start the opening moves in a trade war. We would like to think that businesses and general public opinion might pressure the EU Commission to reconsider. Sadly, that’s not how the EU works.

Nevertheless, our question for the ideologues in Brussels is simple:

Do you really want to pick a fight with your second-largest market in the World?

If so, and in the words of the old song, “There may be trouble ahead.”

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[ Sources: EU Commission | Dept for International Trade report 29 Oct 2021 | Office for National Statistics latest trade report | Statements from Lord Frost ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Sun 07 Nov 2021

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Reader Comments 13

1. Robert, West Yorkshire , Sunday, November 07, 2021, 08:50:

Superb statistics, simply and clearly presented. You must carry on with your work or who else will bring us this quality of information?
I just sent you £50 and hope it helps. I imagine if every reader gave you £3 per month you'd be fine, but we live in the real world hence me trying to do my bit.
KBO, as Winston Churchill used to say!

2. Tom Jones-Parry , Sunday, November 07, 2021, 09:33:

EU will do what it can to mess with us weather it logical or not. Never mind their position so long as we can survive its the right thing to do.

3. Tim Dalley , Sunday, November 07, 2021, 10:09:

The EU is failing and needs to put the blame on something to deflect attention from its own acts. Using Brexit is ideal for them in the short term, in the long term it’s the end of the EU.

4. Laurie Arthurs , Sunday, November 07, 2021, 10:53:

I try to avoid buying European goods now.

5. One eyed king , Sunday, November 07, 2021, 15:36:

Yes there truly would be serious consequences, with the UK released from this hobbling deal and truly sovereign. Success. In my opinion the charade continues until this globoparty shills get removed from anywhere near leadership. They are deliberately ending your way of life and history and still nothing.
There should have never been a deal that left us exposed. They will continue to strip pro brexit mps from tory benches then you get to vote again.
This politico are shaming us on the world stage, just like the Americans, and still nothing.
And any remoaning nudgers that would like to actually debate the fact that you are subversive to democracy and against your own. No honour amongst the thieves of our pride at the end as history closes the circle

6. jon livesey , Sunday, November 07, 2021, 17:57:

Very good facts and presentation, but there are two other ways to look at it. The first is that obviously leaders are not always rational. Germany twice in the 20th century set out to conquer Europe to increase their own wealth and ended up destroying it instead. The argument that you don't take actions that destroy your own wealth in the short term did not work in 1914 and 1939 because the belief that war would make Germany stronger in the long term won.
And so this is also the second argument now. If Brexit enables us to diversify our trade away from Europe and reduce their trade surplus with them, then a trade war could be motivated by trying to force us to stay within the EU's orbit and prevent that eventual reduction in trade surplus from happening.
I would like to think that the Brussels crowd are rational enough not to start a trade war, but when you look at the way they are currently dealing with Poland, they seem to be towards the very aggressive end of rational. They claim to be rational, but they are talking themselves into being aggressive.

7. Billy Smith , Sunday, November 07, 2021, 18:01:

An excellent summary. Boris has not got Brexit done until Northern Ireland is fully included in all its provisions, the UK internal market restored, and the remit of the politicised European Court over the UK removed.

8. jon livesey , Sunday, November 07, 2021, 18:35:

#7 Billy Smith. I agree with that, and clearly legal jurisdiction is the key issue. The NIP is not a normal agreement as long as one side, the EU, has control over the outcome of disagreements.
But it's interesting that this weekend we are back to EU threats over NI. Brussels is saying that the UK can't access EU scientific projects - meaning we can't give them 15bn in funding - until the NIP is settled. And Coveney is saying that the EU might "shelve" - or "set aside" never just break - the entire Free Trade Agreement.
There is something about the NIP, which we remember represents only about 2% of total trade, that is so important to the EU that they willing to threaten to break all the agreements they have signed so far in order to get it.
I think we should follow their reasoning and tell them that if the NIP is so important to them, they should be willing to *give* something to get it. And they should also rememeber that Article 16 is part of the NIP, and they already used Article 16 themselves, so they can't argue that the UK using it is something shocking or illegal.

9. Hammond David , Monday, November 08, 2021, 11:38:

Another article to keep us quiet while still the dinghies come over from Calais.

10. Tom , Monday, November 08, 2021, 18:41:

You Leavers have done enough already . Project Fear did say we'd come out worse & risk a trade war with the largest trade bloc whic also happens to be our neighbour. Here we are.The lack of critical thinking in right-wing idelogy is astounding. Yes, the EU will take a hit from a trade war but so will we you know-it-alls! The lack of education in some parts of UK society are done deliberately by over a decade of austerity & newspapers that appeal to the less educated. - just look at what you've managed to instigate by failing to read or think logically. Oh & you can bet Biden, who openly despises the PM will also have something to say. What a disaster.

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