Evaluating European trading arrangements

The EU protects agriculture and manufacturing through its commercial policies, namely its tariffs, its non-tariff barriers and the Common Agricultural Policy. By leaving the EU the UK would be able to abandon the EU’s protectionist system in favour of free trade combined with transitional compensation for those hit by the changes. This would raise economic welfare by around 4% (i.e. UK households would be able to consume 4% more goods and services) and enhance the shift of the UK economy away from manufacturing into service industries where UK growth has been concentrated largely in the decades since 1979. As the UK is a small country with little if any monopoly power in world markets, bilateral trade agreements have trivial effects on it.