HAMISH MCRAE: Deal or no deal Brexit doesn't really matter

The trade row with Europe was always going to go to the wire and the talks were always going to be contentious. But there was something you were almost not allowed to say about them. So here goes. On a long view, what happens doesn’t matter much either way. 

Short term, yes, of course, it matters. Economic disruption is always bad, as we have learnt so dramatically in the past few months. 

There will be some disruption anyway, because the deal – if it is agreed – will be a minimal one. But the disruption will be worse if there isn’t. 

In the longer run however, the picture is very different. There are two reasons for this. One is that most of the world’s trade happens without trade deals.

The UK does not have a trade deal with the US, yet that is our largest export market. We don’t have one with China, yet that is our fastest-growing major market. There are few effective trade agreements for services, yet the UK is the second largest services exporter after the US. 

Trade agreements are helpful, which is why we should welcome the outline one signed on Friday with Japan, the world’s third largest economy. 

We should welcome one with the US, and indeed with the EU if these can be done. But they are not essential. As for trading on World Trade Organization terms, the default relationship, that is what China does and it has managed all right. 

The second reason is that Britain’s trade is going to shift away from Europe anyway because other markets will grow faster. Continental Europe is and will continue to be a slow growth region. Most of the rest of the world will outpace it. So the share of exports to Europe, which has been falling for more than a decade and is now down to 43 per cent, will fall further. 

The really intriguing thing is that in terms of population and economic growth, the UK shares more characteristics with North America than it does with Europe. 

You have to take all projections with a pinch of salt, but the massive research project published in July by the Lancet showed the UK passing Germany in the second half of this century to become Europe’s most populous nation. 

As for the size of the EU economy, the US is already bigger (much bigger now that the UK has left); China will pass it in another five years’ time; and it is possible that India will pass it within the next couple of decades. 

None of this is an argument for a punch-up with the EU. It will remain an important market, and important in human terms too, for the UK is fortunate to have attracted so many talented young Europeans to its workforce. It is simply an observation that it will become less important, deal or no deal, than it is now. Without the UK, it is down to about 17 per cent of the world economy and over the next 30 years it will fall to about 12 per cent. It is that other 88 per cent that the UK will have to focus on. 

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House prices hit an all-time high last month, in defiance of many commentators’ predictions. Noone likes being wrong, and the more bearish soothsayers are now doubling down, suggesting that the housing crash has merely been postponed till after the stamp duty cuts expire. 

The more confusing the times, the more important it is to hold on to clear facts. Here are three. 

One is that the number of people living in the UK is rising, with the ONS predicting that it would increase by about three million over the next decade. These people will need somewhere to live. 

The second is that people have always wanted space, and that underlying human desire has been given a huge boost by the health crisis this year. 

The third is that central banks everywhere, including the UK, will hold interest rates down and keep pumping more money into the system. 

That money has to go somewhere, and surprise, surprise, some of it seems to be going into the property market. 

Conclusion? There will be a soft period in house prices once the stamp duty concessions expire. If unemployment rises as sharply as suggested by the economists, that soft period could continue for some while. 

But a crash? Deep breath: for those three reasons above… unlikely.