The U.K. may struggle to sign up free trade deals because it’s no longer the global commercial powerhouse it once was, according to Deutsche Bank.
The country’s share of world imports now stands at around 3 percent, versus 10 percent in the late 1940s, strategists Oliver Harvey and Rohini Grover wrote in a note this week. That's just one tenth of the European Union's and below that of the U.S. and China.
“While not insignificant, the U.K. market is not as attractive as in the past for countries seeking to conclude free-trade agreements.”
As well as Britain's diminishing influence over global trade, the relative asymmetry between the U.K.'s export share in foreign countries and their share in sales to the U.K. may present further challenges in negotiating after Brexit, Harvey and Grover said.
The U.K. is an important trading partner for Belize, Norway, Mauritius, the Faroe Islands and Iceland, but these are not important markets for British exporters. According to the Deutsche Bank strategists, in addition to the EU, the U.K. should prioritize new deals with the U.S., Switzerland, and China.
And on top of all that, there's the general backlash against globalization, as highlighted in this WTO report. In Deutsche Bank's view, difficulties are heightened “given resurgence in protectionist political rhetoric globally.”
“Today is a suboptimal time to be renegotiating free trade deals.”