U.K.’s Next Brexit Agony: What Sort of Trade Deal?

LONDON — With European Union leaders having agreed at a summit meeting last week to start talks on trade ties after Britain withdraws from the bloc, the country is finally starting to think about what it wants, and that is creating a whole new set of problems.

Some think Britain should be like Norway, outside the European Union but tightly bound to the bloc’s high social and economic standards. Others prefer the model of , which has looser trade ties to the bloc.

There are those in Britain who want their country to break free, cutting taxes and regulation and transforming itself into a European version of . And there are some who cannot make up their minds, musing on a “Canapore” option, a hybrid of the Canada and Singapore models.

The stakes are high because almost all experts predict that Britain’s departure, known as Brexit, will hurt the British economy more than staying would.

“The U.K. will be economically worse off outside of the E.U. under most trade scenarios,” said Charles P. Ries, vice president at the RAND Corporation and the lead author of a recent report on the economic outlook after Britain’s exit from the bloc. “The key question for the U.K. is: how much worse off?”

Britain’s trade future could be dominated by “customs checks, different regulations, different standards and trade falling off a cliff,” said Anand Menon, a professor of European politics and foreign affairs at King’s College London, adding that economic arrangements would most likely descend into a “nightmare.”

Even some who think a reasonable outcome is possible say a moment of truth is approaching. Britain will have to decide whether to sever many or most ties with the European Union — and face a brutal economic adjustment — or settle for a less advantageous version of what it currently has.

“More and more, you find that the question is what kind of country you want to be,” said Mats Persson, head of international trade at the advisory firm EY.

“Do you want to go down the route of Norway, with high tax and high social protection, and close alignment to European Union rules, or Hong Kong, with free trade and lower regulation?” Mr. Persson said. “That’s the essential choice, and there isn’t a democratic mandate for either.”

Almost 18 months after Britons voted to quit the European Union, that question has not even been discussed by members of Prime Minister Theresa May’s cabinet, who are due to hold their first meeting on the subject soon.



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