The key thing to appreciate is that if we withdrew from the CAP (EU common agricultural policy) and dropped the CET (EU common external tariff) on imports from the ROW (rest of the world) then this would be a move in the direction of free trade giving a large saving to UK consumers and other users of foreign imports. 

Prices would fall, offsetting the increase from the earlier fall of sterling. Admittedly, this would put increased competitive pressure on domestic producers and would tend to result in increased imports. But offsetting that is the likelihood that EU exporters to the UK would cut their prices in order to compete with imports from the ROW.

Take wine as an example. If the UK price of wine from South Africa, Australia, Chile et al fell significantly then the UK price of French wine would have to fall or France would suffer a big loss of business. Some industries (including agriculture) might need support but, helped by the now much lower pound, most manufacturing sectors would cope very well, with some benefiting strongly from lower import prices.

Bamboozled by the post-war consensus in favour of multilateral trade deals, and emasculated by the transfer of competencies to the EU, politicians and government officials, as well as many businesspeople, still don’t fully appreciate the attractions of free trade. The balance of trade is viewed as a sort of profit and loss account. Exports are good and imports are bad. But this is nonsense. In reality, the gains from trade derive not from exports but from the exchange of exports for imports. In this exchange imports are just as important as exports.

According to all the great economists, the ultimate aim of economic activity is consumption. Investment and production are means to this end. But there is another tradition in popular thinking and economic policy-making that values production for its own sake. It is called mercantilism. This is the philosophy that underlies the economic policies of Germany, which seems content to run huge current account surpluses without end. Our leaders must not succumb to it.

By all means let us try to gain preferential access to European markets if we can. But if we don’t succeed, this is no reason for us to restrict or penalise imports. We should be aiming for completely free trade – with everybody. Moreover, to embrace free trade ourselves, we don’t need to engage in endless negotiations taking umpteen years. If they don’t play ball we should simply do our own thing.

This won’t be readily accepted by our business lobby groups, many of whom will argue for tit–for–tat and for continued protection against the ROW. This is because much of the advantage of free trade will accrue to consumers, who do not have a say in their deliberations. It is up to ministers and officials to take full account of the interests of 65 million consumers who, if they understood what was at stake, would be clamouring for free trade.

David Fuller's view

I think Roger Bootle is right, but I am not aware that anyone within the UK government is actively advocating this course, and certainly not the Chancellor of the Exchequer.

Perhaps the Government is holding its Brexit cards close to its chest prior to the Declaration of Article 50, but I believe the country would welcome can-do leadership from PM May and her team.  This can only help to build confidence and support which both the country and the Government need.  

Here is a PDF of Roger Bootle's column.