The Civitas think-tank has published a report showing that should trade deals with the EU fail, the government would have to provide £9bn to support business.  The costs, however, could be covered by tariffs on imports on 27 other EU member states.

According to the report, billions could be spent on aid within World Trade Organisation rules to help businesses adapt to trade tariffs from the EU.

The report highlights one package that would spend £2.9bn on research and development, £3.8bn could be spent on regional aid together with grants to businesses affected by Brexit.

The think-tank has also recommended abolishing the carbon price floor mechanism.  This is a scheme that complies with the EU Emissions Trading System, which puts a price on greenhouse gas emissions.

The report says a package of this type would benefit industries affected by tariffs to the tune of £6.3bn, which is higher than the costs of £5.2.bn.

According to the think-tank, the total cost to the Treasury including “leakage” would be£8.8bn.  This is easily reclaimed by the £12.9bn collected from imported EU goods.

The aim of the report according to its author, William Norton was that the UK had little to fear if a tariff-free trade deal could not be struck with Europe.

He said, “Hitherto, the political debate about the UK’s departure from the EU has focused upon the risks of a ‘hard’ Brexit and the need to soften this by avoiding costs for business such as tariffs being levied upon exports to the EU27.

“But these tariff costs can be managed. In an ideal world, British exporters would not have to suffer them, but it is possible to mitigate their impact through other measures which are justifiable in their own right.

“It makes sense to remove a self-inflicted wound like the carbon price floor, which is damaging British competitiveness and low-income households.

“It makes sense to provide greater tax incentives for research and development. A case can be made for regional aid given the imbalances in economic performance and employment across the UK as a whole.

“The balance of negotiating strengths is far more favourable to the UK. If the EU27 wish to impose a self-inflicted wound by levying tariffs on British exports, Britain has little to fear.”