Economic Report 2017

To assess the imƉact oĨ leaǀing the U, tǁo diĨĨerent redžit scenarios haǀe ďeen modelled͗

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• Fresh opportunity scenario ʹ ǁhereďy the UK negotiates minimal tariĨĨs ǁith the U and imƉroǀed tariĨĨs and Ĩaǀouraďle trade agreements ǁith other nonͲ U nations͘ In this scenario, the direct cost oĨ trade Ĩalls to around £ 5 00 m illion p e r annum .

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• World Trade Organization (WTO) scenario ʹ ǁhereďy the UK is not aďle to negotiate neǁ trade deals and reǀerts to tTO rules͘ In this scenario, the direct cost oĨ trade increases to around ά1͘1 ďillion Ɖer annum͘

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F igur e 17 sh ow s h ow t h e cost s of t r ade m ay ch ange unde r t h e t w o diffe r e nt Br e x it sce nar ios com p ar e d t o b usine ss as usual, should trading Ɖatterns remain unchanged͘

Figure 17: Annual Direct Tariff Costs Under Different Scenarios for the Whole Oil and Gas Sector

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7 00

E U N on- E U

5 6 7 8

6 00

2 00 noilliM £ ( tsoC edarT - 2 016 Money ) 3 00 4 00 5 00

100

0

I mports

E x ports

I mports

E x ports

I mports

E x ports

B usiness as Usual

WTO

F resh Opportunity

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Source: E Y , Oil & Gas UK

At around 2 Ɖer cent oĨ the total ǀalue oĨ trade, eǀen under the tTO redžit scenario, the direct tariĨĨ costs associat e d w it h Br e x it for t h e oil and gas indust r y ar e an unh e lp ful addit ional cost on an indust r y t h at cont inue s to ďe under signiĨicant Ɖressure Ĩrom a sustained gloďal doǁnturn͘ EonͲtariĨĨ ďarriers that may arise ƉostͲ redžit, ǁhich are Ĩar harder to ƋuantiĨy, may ďe oĨ greater concern to industry and increase the cost oĨ trade Ĩurther͘

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