Could the UK simply walk out of the EU (and the single market) without any negotiation and then trade with the EU “like any other country in the world”? It sounds easy….but the devil is in the detail.

The EU discriminates against countries outside the EU and EEA unless it has agreed preferential trading agreements (PTAs) with such countries. The EU already has such agreements with 55 countries and a further 80+ are in progress. That’s 145+ countries. Once it had left, the UK would obviously become a non-member and without its own UK-EU PTA could then face tariffs from the EU and trade discrimination arising from the 145+ countries operating under a PTA.

On average, tariffs are low these days and advocates of this approach always stress that. But this average hides some high and low tariffs. For example, an 8% tariff is applicable to car imports. The other larger aspect to this is the issue of non-tariff barriers, which are likely to re-emerge causing havoc with business supply chains – especially just-in-time ones – that have been built around the EU/EEA being a single “domestic” market. It’s estimated that performing a UK exit in this way would cost £26bn annually, most of it from non-tariff barriers.

“Ah”, say supporters of this option, “but the EU would have to make an agreement with us on exit because they buy half our exports and we buy loads from them – they’d be mad not to do a deal”. Firstly, while the EU does buy half of UK exports, the UK only accounts for circa 10% of exports from the EU. The UK would be in a weak position to negotiate access on its terms.

Plus one bigger issue: trade agreements can take years and years to hammer out. After an Out vote, there would be enormous political and financial market pressure for the UK to conclude a deal fast. And that may be simply impossible, even in the 2 years allowed for by an exit under Article 50.

Is this approach therefore bad? No, several options are better than staying in and this one has a number of features to commend it, not least “fuller” independence. But it comes with enough uncertainty that it may not survive a referendum campaign so we’d never actually get out.

Far better to focus on a quick exit using existing structures, which means an initial step back to EFTA/EEA membership and therefore continued participation in the single market. Then we can take time to consider longer term arrangements.