Brexit Update: Deal or No Deal?
So what are the scenarios facing the UK come next March? And what does No Deal look like?
- Theresa May wins the day: The broad outline of the Chequers White Paper are accepted by the EU27 in December. The EU27 is clear that Parliament’s rejection will result in Britain leaving the EU with the hardest of Brexits. Parliament approves the deal.
- UK exits, no deal: May accepts a deal that prevents Britain from striking its own trade arrangements, whilst being bound into Brussels rules. Parliament rejects it. Attempts to extend Article 50 fail. Britain leaves the EU with no deal on 29 March.
- Trade: Tariffs will be imposed on goods imported from and exported to the EU. Tariffs on many products will be 2-3%, but on cars around 10% and on many agricultural products between 20% and 40%. These additional costs are likely to significantly impact the competitiveness of UK exporters. Trade in services will suffer from the loss of ‘passporting rights’ which allow services to be sold across the EU without having to obtain licences in each country.
- Customs: Britain would establish a stand-alone customs regime from day one, applying the same duties to every country with which it has no special deal.
- Regulations: Britain would cease to be a member of dozens of regulatory agencies that govern many aspects of daily life. These relate to legislation governing common product standards, such as how products are processed, tested, licenced, labelled and packaged.
Responsibility for enforcing these rules rests with a combination of national bodies, 35 pan-European regulators, and international courts. UK firms operate under these rules, whether they are producing for the domestic market or for export. However if the UK left without a deal, the responsibility for ensuring that UK exports complied with EU rules would shift from UK regulators to EU customs officials.
- People: There will be uncertainty over the status of 4m European & UK citizens who live across borders.
- Limited trade agreement: The EU27 rejects key elements of the White Paper. May then pursues a (time) limited free trade agreement with Brussels, outside both the Single Market and customs union. Parliament approves the deal.
- Britain stays in the Single Market & customs union: Impasse continues, May pushes a limited Canada-style free trade agreement. Parliament vetoes the plan – so membership continues.
- No Brexit: Either through i) a second referendum – either before or during the transition period or ii) an extension to Article 50, or iii) a General Election where the winning party stood on a Remain platform.
On the political front, in the next year we could see a possible leadership election for Mrs May, a General Election or a second referendum to get support for the deal from the country.
Either way, there’s going to be some very nervous counting of votes ahead, as Britain heads for the Exit.