A “chaotic Brexit” without a trade deal or agreement on the terms of withdrawal would have “widespread, damaging and pervasive” consequences for the UK, according to a new report.
Prime Minister Theresa May has repeatedly said that “no deal is better than a bad deal” – but the report by academic think tank UK in a Changing Europe warns it could result in British airlines being unable to fly, nuclear power stations ceasing operation and “legal limbo” for millions of EU citizens in the UK and Britons living on the continent.
The think tank brings together experts from politics, law and economics.
Its report, entitled The Cost of No Deal, also warns there would be “serious political and economic implications” for Northern Ireland.
The think tank’s director, Professor Anand Menon of King’s College London, said a chaotic Brexit could happen in two circumstances:
- If talks under Article 50 of the EU treaties break down prematurely and acrimoniously, with the UK ceasing to pay EU contributions and ending the supremacy of EU law in the UK with immediate effect; or
- No agreement is reached within the two-year deadline set by Article 50, which runs out on March 29 2019, and the remaining 27 member states do not agree an extension.
The report found that a “no deal” withdrawal is likely to trigger a further “significant” fall in the value of the pound, leading to a rise in inflation, a fall in wages and consumer demand and a decline in business confidence and investment.
Legal “chaos” over the enforcement of contracts would add “costly and time-consuming” burdens on businesses exporting to the EU.
The report predicts the British Government would be likely to blame Brussels and supporters of Remain for the failure to reach an agreement, in a “mutual blame game” which would make future co-operation with the EU more difficult.
Professor Menon said: “Our findings show a chaotic Brexit would, at least in the short-term, spawn a political mess, a legal morass and an economic disaster.
“This report makes it clear ‘no deal’ is an outcome the British Government must strive to avoid.
“‘No deal’ doesn’t mean the country would come to a stop. But even under relatively benign conditions and with time to prepare, the impacts would be widespread, damaging and pervasive.”
The report’s publication comes as the second round of Brexit negotiations between the United Kingdom and the European Union draw to a close today in Brussels.
At joint press conference, the UK’s Brexit Secretary David Davis and the EU’s chief negotiator Michel Barnier are expected to give a sense of how the second round of talks have gone.