Firms will face 'years of uncertainty' if we exit EU, warns Lord Mandelson


British firms will face years of uncertainty and the possibility of tariff barriers on exports if the country votes to sever ties with Brussels, former trade commissioner Lord Mandelson will warn.

The ex-business secretary will say that negotiating a free trade deal with the EU following a vote to Leave would be "harder than Brexiters think" because for every sympathetic politician in the other 27 member states there would be others who believe the UK "must not be given a quick or easy ride".

The Labour peer will warn that without the benefit of EU trade deals with international markets, British cars, whisky and textiles could attract tariffs of 20% or more.

"Being part of a powerful trade bloc is an advantage not a straitjacket and one with a long track record of success," he will insist. "The EU is probably the world's leading rule setter in international trade and this is a significant strength for Britain."

In a speech in the City of London, the former EU trade commissioner will say: "Brexiters cannot argue that we are weakened in the EU as it is but would suddenly be strong enough to dictate terms if we left. For every politician who saw the pragmatic case for dealing with the UK, there would be another who had little doubt that the UK must not be given a quick or easy ride."

Brussels, he believes, would insist on the UK signing up again to common standards in order to gain access to the single market following a vote to leave in the June 23 referendum.

"As a result, we would have left the EU in order to assert our national sovereignty only to find that, as a condition of access, we did not have independence from EU regulation after all," he will say.

A free trade agreement (FTA) would take years to negotiate, Lord Mandelson believes, stretching beyond the two year period for settling the UK's terms of exit from the EU.

"The negotiation would mean years of uncertainty and in the worst case scenario a return to paying EU tariffs while a final deal on an FTA was struck," he will say. "Even a low tariff can change the calculus of a supply chain economy in a highly cost-sensitive global economy and for the large volume of trade that we hope would continue, that could be a considerable sum of money."

He will claim that losing the EU's preferential trading benefits in foreign markets could lead to "new tariffs of 10%, 20% or sometimes even more on key UK exports such as cars, machine goods, whisky and textiles".

British consumers could also face paying higher prices because "the UK would also potentially have to raise its own tariffs on imports from these markets as they would no longer be covered by WTO-compliant agreements".

Dismissing the Leave camp's goal of the UK striking its own deals with the EU and world powers, he will say: "In trade, you need bargaining chips in order to negotiate benefits in exchange and Britain is already a relatively open economy. We would end up having to sacrifice sensitive positions in order to secure these deals."

Despite the UK being the world's fifth biggest economy, Lord Mandelson will claim that it would not find potential partners eager to strike deals.

"Our desired negotiating partners have their own priorities and would not necessarily move the UK to the front of the negotiating queue," he will say.

"The US Trade Representative has already warned that London could not expect a bilateral negotiation with the US in the event of Brexit."