London – Few hours after allowing a vote on no deal and a possible ‘short’ extension of Art 50 in what can be described as the day of May’s concessions in order to avert further defection within the Conservatives, the government issued the awaited ‘no deal’ impact assessment. The evidence in figures will make difficult to hard Brexiteers Tory fringe to support a ‘no deal’ exit. The paper is far more scaring than worst economic forecasts.
Few main dramatic points:
1) UK economy would be 6.3-9% smaller in the long term in a no deal scenario (after around 15 years) than it otherwise would have been when compared with today’s arrangements, assuming no action is taken. There would also be significant variation across the UK (Wales -8.1%, Scotland -8.0%, Northern Ireland -9.1% and the North East of England -10.5%).
2) Custom: as a result of French checks and lack of businesses readiness, the flow of goods through the Short Channel Crossings (Dover and Eurotunnel) could be very significantly reduced for months. 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU
3) EU Tariffs: the EU would introduce tariffs of around 70% on beef and 45% on lamb exports, and 10% on finished automotive vehicles.
4) The service sector, which makes up around 80% of UK GDP, is supported by free movement of people and a range of cross-cutting regulation such as mutual recognition of qualifications. In a no deal scenario, UK businesses would be treated as third-country service providers by the EU. The UK would risk a loss of market access and increase in non-tariff barriers. UK businesses would face barriers to establishment and service provisions in the EU which they had not previously faced, including nationality requirements, mobility, recognition of qualifications and regulatory barriers when setting up subsidiaries in EU member states.