A 'no-deal' Brexit might look like this
LONDON — It’s the Brexit scenario that almost everyone dreads: Britain crashing out of the European Union with no divorce agreement and no arrangement for future trade.
And at the moment, that's the default option for what will happen on March 29.
By sending notification that it was leaving the E.U., the U.K. started a stopwatch of sorts giving it two years to come to an agreement.
On Monday, Prime Minister Theresa May announced that a vote by lawmakers on the withdrawal agreement she negotiated with the E.U. would take place in mid-January. An earlier vote was postponed at the 11th hour because May's plan didn't have enough support. May subsequently survived an attempt by her own party's lawmakers to oust her.
With politicians still squabbling about both what the future relationship with the E.U. should look like and how the U.K. should leave the 28-member bloc, a "no-deal" Brexit is a very real possibility.
The vast majority of lawmakers, economists, businesses and experts find that scenario difficult to contemplate and say that it’s nearly impossible to predict with any accuracy what could happen.
There would be no transition and an abrupt end to more than four decades of agreements. The consequences of the divorce are far reaching and affect nearly every aspect of society. E.U. law and policy influences trade, security, medicines, travel, workplace regulations and more.
Economic misery, chaos at ports, grounded flights and food shortages are all possibilities, according to analysts
Around 3,500 troops will be on standby to help deal with any disruptions, the defense secretary said Tuesday. The comments came as the government stepped up preparations for a disorderly Brexit.
“I think no deal would be absolutely catastrophic for this country,” Conservative lawmaker and former attorney general Dominic Grieve told Sky News this summer. “We’ve got to be realistic about this. We will be in a state of emergency. Basic services which you take for granted might not be available.”
Part of what has made the Brexit process so difficult is the lack of precedent. No country has ever untangled itself from an organization like the E.U.
The flow of goods between the U.K. and E.U. runs as smoothly as it does between California and Texas, with no time-consuming customs checks or paperwork. Manufacturers order goods when they need them, eliminating the need for warehouses. Food and medicine flow seamlessly across the borders with no delay.
British maternity wear maker Tiffany Rose has spent the last year planning for Brexit. Its largest export market is the E.U. and a "no-deal" Brexit would mean a big change in the way it does business.
“It’s really frustrating having to spend time planning for this when we would really like to spend time planning to grow,” Tiffany Rose director Christian Robinson said.
The company, which sells to Nordstrom and Neiman Marcus in the U.S., has made plans for several different political outcomes, but can only afford to take concrete action once the reality becomes clear.
“I would hope we don’t have to wait until time goes down to the wire before we have clarity,” Robinson said.
The business is dependent on trucking and logistics companies, which would also be among the first industries to feel the effects of a "no-deal" Brexit.
Rod McKenzie, the managing director of policy at the Road Haulage Association, described the impact on the trucking industry as "dire."
He said freight businesses were "facing a very serious situation which the government has not adequately made provision for."
The customs paperwork alone would be crippling, according to the organization. In addition, each truck would need a special permit to cross into the E.U.
The shock waves of a "no-deal" Brexit would be felt across the British economy.
According to potential scenarios modeled by the Bank of England, the U.K.’s GDP could be up to 10.5 percent lower than it would have been by the end of 2023.
Unemployment could spike as high as 7.5 percent — up from 4.1 percent now — and inflation would rise as well.
With just over three months to go before Brexit day on March 29, the government has said that it is stepping up its preparations in case no deal is agreed, including plans to stockpile a six-week supply of medicines.
"I've become the largest buyer of fridges in the world," Health Secretary Matt Hancock told the BBC on Monday.
But that may not be enough.
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“The government is past the point where it can have everything ready if no deal happens,” said Tim Durrant, a senior researcher at the Institute for Government, a non-partisan think tank.
It’s not just the government that needs to plan. According to the Bank of England, just under one-third of companies have made some change to their business plans to prepare for Brexit.
“Many businesses are skeptical about investing time and money into something that won’t happen, but if they don’t then they will have even more problems,” Durrant said.
EXPAT UNCERTAINTY
There are 3 million citizens from the E.U. who live in Britain and another 1 million Britons who live in the E.U.
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Because they are from fellow member states, they are allowed to live and work across the E.U. with no special visa arrangements, are eligible to receive state benefits like health care and can even vote in municipal elections.
If Britain leaves the E.U. with no deal in place, their legal status is uncertain.
Even with the doom-and-gloom scenarios predicted, some Brexit-supporting lawmakers in the prime minster's own party are overtly pushing to leave with no deal.
Many say that they find it preferable to signing up to the withdrawal agreement that May brought home from Brussels.
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“We must stop the doom-mongering. After all, we have been preparing for no deal for over two years and more than £4 billion ($5 billion) has been set aside for these preparations,” Conservative lawmaker Michael Tomlinson wrote in the Guardian newspaper last week.
FEARS OF VIOLENCE
One area that could feel the harshest effect of a no-deal scenario would be the border between Northern Ireland, which is part of the U.K., and the Irish Republic, a separate country that will remain part of the E.U.
This is the only land border the U.K. shares with an E.U. country, and it is currently more or less invisible.
Memories of "The Troubles" — a decades-long conflict that ended with a peace deal in 1998 — are still fresh and there’s a strong desire to avoid a return to a physical border with checkpoints. With no agreement that may not be possible.
Some fear that could provoke a return to violence.
Brexit Threatens to Shatter Northern Ireland's Fragile Peace
OCT. 17, 201706:05
“It might not be that at the end of March 2019, if there’s no deal that all of a sudden walls are going to go up," said Feargal Cochrane, a professor of international conflict analysis at the University of Kent. "They may have a soft landing for a week or two but you can’t see it going on longer than that."
Efforts to police the border and subsequent arrests could quickly spiral into protests, stone-throwing and even conflict, he warned.
IMPACT ON THE U.S.
For the U.S., Britain’s exit from the E.U. could mean the loss of an influential ally when it comes to foreign policy challenges like Iran sanctions, countering China’s influence and responding to Russia’s aggression.
“In a 'no-deal' exit, the British government would go into crisis mode, and would have to deal with the immediate effects of long lines at ports, questions of food and medicine, and interruptions to flights,” said Amanda Sloat, a former State Department official during the Obama administration and a senior fellow at Brookings Institution.
Food shortages could be a consequence of a "no-deal" Brexit.Daniel Leal-Olivas / PA Wire/AP file
That means it wouldn’t have the bandwidth to address much of anything else, she explained.
The U.S. has mostly stayed out of the debate, and the official line is that it would change little for the close allies. However, analysts say that's not necessarily the reality.
“Generally in terms of Brexit the U.K. leaving the E.U. will be a loss for the U.S.,” Sloat added, suggesting it could ultimately reduce U.S. influence within the E.U. “They are our most like-minded ally.”
Rachel Elbaum
Rachel Elbaum is a London-based editor, producer and writer.
Alexander Smith and Associated Press contributed.
“The government is past the point where it can have everything ready if no deal happens,” said Tim Durrant, a senior researcher at the Institute for Government, a non-partisan think tank.
It’s not just the government that needs to plan. According to the Bank of England, just under one-third of companies have made some change to their business plans to prepare for Brexit.
“Many businesses are skeptical about investing time and money into something that won’t happen, but if they don’t then they will have even more problems,” Durrant said.
EXPAT UNCERTAINTY
There are 3 million citizens from the E.U. who live in Britain and another 1 million Britons who live in the E.U.
Because they are from fellow member states, they are allowed to live and work across the E.U. with no special visa arrangements, are eligible to receive state benefits like health care and can even vote in municipal elections.
If Britain leaves the E.U. with no deal in place, their legal status is uncertain.
Even with the doom-and-gloom scenarios predicted, some Brexit-supporting lawmakers in the prime minster's own party are overtly pushing to leave with no deal.
Many say that they find it preferable to signing up to the withdrawal agreement that May brought home from Brussels.
“We must stop the doom-mongering. After all, we have been preparing for no deal for over two years and more than £4 billion ($5 billion) has been set aside for these preparations,” Conservative lawmaker Michael Tomlinson wrote in the Guardian newspaper last week.
FEARS OF VIOLENCE
One area that could feel the harshest effect of a no-deal scenario would be the border between Northern Ireland, which is part of the U.K., and the Irish Republic, a separate country that will remain part of the E.U.
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