£ 10 Billion Trade Agreement!!!!

Sure, it\’s nice to have more trade, nice to have more investment here (which of course raises the productivity and thus wages here).

Tens of thousands of jobs could be created in Britain by Chinese companies, Gordon Brown said, as he hailed an historic deal which he hopes will increase trade between the two countries by £10 billion over the next two years.

£ 5 billion a year, eh? 0.003% of the economy? Even with our rather anaemic trend growth rate of 2.5% or so, that\’s simply noise, not something we could actually identify. And we could probably get that sort of boost without flying hundreds to China on the taxpayers\’ penny: simply abolish a hundred or two restrictive regulations instead.

Another way of looking at it. If boosting trade is indeed so important, then we should be looking at ways to do it in the most efficient manner. Patrick Minford has pointed out that leaving the EU and having free trade would boost the economy by 3%.

So, again, if boosting trade is such an important point, we could get 100 times the bang for our buck by leaving Brussels, instead of going to China.

7 comments on “£ 10 Billion Trade Agreement!!!!

  1. This post seems to be under the impression that Britain has a GDP of £16 trillion pounds. easily more than double that of the United States.

    I know Brown was a good a Chancellor but I think you’re going to have to scale down your admiration of his record when you realise its not been that good. Ditto when you learn that Patrick Minford’s plan is not going to increase our GDP by half a trillion pounds.

    Tim adds: Indeed, undercaffeinated. 0.3%, forgot to multiply by 100 when getting to the percentage. Oopsie!

  2. It wasn’t the scale of the deal that concerned me but the language it was couched in. For example, from The Telegraph:

    “Mr Brown wants to see 100 new Chinese companies investing in Britain by 2010 and 100 new educational partnerships between the two countries.”

    Why? What rational basis in hoping for 100 of anything? It’s an arbitrary target chosen for its publicity value rather than economic merit. He’s obviously been given a few pointers by the Chinese on how to draft an economic plan.

  3. Increasing trade by £5 bn does not increase size of economy by £5 bn. It increases it by the amount of extra profits that exporters make and the extra savings that consumers make, so a fraction of that.

  4. Pingback: A Memorandum to Libertarians and Socialists: Part One « Left Outside

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