Britain should unilaterally abolish tariffs to give it an edge in Brexit talks and drive down prices for consumers, a new report states.
Such a move would make the UK a champion of free trade and strengthen the country’s negotiating hand with the EU, according to the Policy Exchange think tank.
A tariff-free Britain would gain weight in withdrawal talks with Brussels as it would show the country had a “no deal” alternative, the study said.
Attempting to protect industries through tariffs prevents sectors from innovating and may harm consumers, according to the report.
Warwick Lightfoot, director of economics at the Policy Exchange, said: “This is one of the few areas of consensus in economics – 95% of economists across the political spectrum from left to right support free trade and the principle of comparative advantage, and governments need to catch up.
“Estimates suggest that even halving our tariffs could see a 2.6% boost to UK GDP and unilaterally abolishing tariffs could reduce household bills by £160 a year.
“This not only imposes costs on consumers but also stifles innovation and slows productivity growth.
“When Britain leaves the EU, we have the opportunity to set ourselves free from its protectionist approach to the benefit of British consumers and our economy.”
In a foreword to the report, Alexander Downer, the outgoing Australian High Commissioner in London, said: “Trade is not a zero-sum equation. In the decades ahead all major economies should remove their tariffs and open their markets to competition.
“As the UK once again takes its place at the World Trade Organisation it should take the opportunity to lead by example and remove its tariffs. Other economies should follow that example if they want to increase the prosperity of their people.”
The study said the UK should “focus on mutual recognition of regulation with trading partners, rather than complete harmonisation that could cut off future deals and slow innovation”.