LONDON (Reuters) – Deutsche Bank analysts estimate that the costs to trade between Britain and the European Union will be high even if the two sides manage to strike a deal by the end of the year because of the impact of non-tariff barriers.
“Tariffs make up only a small part of the direct trade cost from leaving the EU,” the analysts wrote in a note.
“Of more significance is the prevalence of non-tariff barriers. These will weigh on trade regardless of whether the UK and EU trade on preferential terms or not,” they said.
Deutsche Bank expects Britain to agree on a Canada-style trade deal with the bloc in the coming weeks, which is referred to as a Free Trade Agreement (FTA).
Such a deal would knock 0.6% off Britain’s gross domestic product (GDP) with a cost of 0.2% to the EU’s GDP, the analysts said.
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