Whenever the Brexit proponents speak of the future, they invariably paint a rosy picture how once the UK is freed from the shackles of the EU that the economy will take off in explosive growth. A major assumption for this argument is that the government will be free to negotiate a really, really formidable trade agreement with the United States which they essentially equate to the…

Alas, poor Albion, you are operating under a delusion which will cost you dearly. There is a well-known cognitive bias in which people, organizations, groups, countries overestimate their relative importance to others. It is natural for an entity to consider itself important, but this overestimation can lead to false perceptions, divorces, and even to wars. Imagine the professional athlete who demands an excessive salary and winds up with nothing. Or the business which thinks its product so important that it no longer tries to keep up with the competition.

This false perception had led the UK to consider its perceived greater importance will yield a great trade agreement. For trade agreements, however, what talks is the size of the economy. Larger countries in terms of GDP and population have much greater bargaining power over the smaller party. That was one reason for the EU in the first place. Trump is having problems with China because its economy is so large that he can’t bully them like he did Canada and Mexico. See my charts for the US, China, EU, and UK for population and GDP in 2017.

As you can see, China gets its leverage from its relatively large economy and its massive population which has other countries salivating over a potential huge market. Similarly, the EU economy is almost as large as the US and the population is considerably larger. So the EU has decent bargaining leverage.

How does the UK fit in this analysis? Both in terms of GDP and especially population, it is “wee.” While the UK’s Brexit weakens the EU’s bargaining clout somewhat vis a vis the US, it is still on decent ground whereas the UK has negligible clout.

So given that, what does the UK have in its favor to get a super friend of US deal? Is it the natural affinity that comes because you speak a quaint dialect of English? You have great TV shows. My wife loves the British baking show, but Netflix is getting good shows from other countries. None of this will impress Trump. With him everything is transactional, but probably any US President would act similarly under corporate pressure

Any trade agreement is going to come with very big strings. Despite what Boris said Trump will push to get America business into your NHS. Good luck there. All the unhealthy food that we in the US have forced on us because health and environmental regulations have been gutted for corporate greed. The arms merchants will push to sell guns there as they have elsewhere. Products manufactured by anti-union business will compete with and take your jobs. All I can say is what Edward R, Murrow said during the Blitz, “Good night, and good luck.”