This is what a no-deal Brexit really means
PUBLISHED: 11:00 11 January 2019 | UPDATED: 14:19 11 January 2019
It's not the short-term jolt you need to fear - it's the years of grind and decline says James Ball.
The way most of us talk about no-deal Brexit, you could be forgiven for thinking it would cause only short-term chaos – because we focus on queues at the border, shortages and other elements of acute crisis, it feels like a temporary thing.
It’s not: much like a puppy, a no-deal Brexit is for life. While it has made a lot of sense to concentrate on the severe, short-run impacts of no-deal – queues at the border, shortages of food and medicine and numerous other problems – it has also created for some the idea of a “short, sharp shock”.
This can be seen in the language being used by people campaigning for no-deal: alongside “world trade deal”, “clean Brexit” is one of the favoured terms. For many people across the country, Brexit is simply something they’re already bored with – and would like to move on from.
Leaving with a deal means years of transition, then talks for a future relationship, and perhaps five or more years until the UK can negotiate trade deals with outside countries. It also, per May’s or any realistic exit deal, means decades of payments to the EU and years of continued jurisdiction for the EU’s Court of Justice.
The danger is that the comparison becomes having a few weeks or months of chaos and difficulties, and then being free to make new trade deals, being outside of the ECJ, and having no more payments to make – versus endless months and years more dominated by Brexit.
If that were the choice, there might even be a Remainer or two who might opt for it, if Brexit can’t be stopped. But of course it isn’t: so here’s a primer on what to expect from no-deal after the initial chaos. It wouldn’t be pretty – and it certainly wouldn’t be fast.
Talks, talks and more talks. Then more talks
One of the most important things to remember about no-deal is that it would involve even more interminable talks, with even more people, with even less negotiating power than we have at present. No-deal won’t end Brexit more quickly – it will make it more painful, and slower, than any of the alternatives.
The first sets of talks would be quick and dirty emergency ones to fix issues as they come up – a whack-a-mole of various crises, aimed at tackling shortages and blunting the worst effects of the no-deal.
Some of these are fairly straightforward: warnings that no-deal could ground flights, for example, were not scaremongering, but would be so utterly disruptive that the EU has made various plans to unilaterally prevent it. But dozens of other issues – foreseeable and not – will arise afterwards, and need crisis talks to sort.
These will be between the UK and EU, and also bilateral talks with the UK and EU nations over issues affecting citizens’ rights, as the EU cannot in this situation require states to override their own laws and choices on what they grant to UK nationals.
That’s just the start of it. Regularising the UK’s terms at the World Trade Organisation will require talks with almost every nation on the planet, as the UK’s current terms are agreed through the EU, and multiple trading partners have already lodged objections to simple, default allocations. If dealing with a union of 27 countries is proving harder than Brexiteers thought, how can we expect a loose coalition of 163 other nations to be any easier?
We would then, of course, have to come to some sort of agreement with the EU. There is absolutely no reason to think the EU’s red lines would change: at present they want citizens’ rights to be settled (we have offered this unilaterally), something to address the Irish border issue – essential for the UK’s compliance to the Good Friday Agreement – and payment of what the UK owes to EU budgets.
We couldn’t just use the exit agreement as-is in this situation, so we would be left having to find a new legal framework for something resembling a worse version of the current, wildly unpopular deal negotiated by Theresa May. And that’s before even beginning trade talks, with the EU or with anyone else. Not quite so ‘clean’ as has been implied.
No reverse gear
The next thing to remember with no-deal is that there’s no quick way back after March 29, if we ended up taking this route. Article 50 and other provisions have created the means for a departing member state to have a transition, or even to reverse the decision to leave.
This is not possible after we’ve gone: there would be no existing legal mechanism for the UK to have something resembling a transition period following our departure from the EU. This would mean we would have to find some form of functioning trading model until we hit on a working future relationship.
The outside hope would be that there would be enough damage on the EU side – or enough willingness to avert a global slowdown – that options not currently on the table might be considered: there is an outside chance that some variant of Norway-for-now might start to be considered as a means of finding a better ‘interim’ state for a few years. However, this prospect remains slim, at best.
As and when the dramas of shortages and border chaos die down, or at least become routine – which could take months – we will start to notice the more subtle effects of abruptly leaving numerous and complex legal treaties and regulatory agreements.
Unless and until we can work out a new set of approvals processes, we may find ourselves unable to sign off on new drugs or approve new pesticides and other chemicals – and could also find the status of some university research and medical research becomes stalled.
Short-term efforts to fix this could make things worse – several trading options with the EU rely on regulatory alignment and for many competencies we simply don’t have a UK-based agency that signs off on their relevant area, as it has been handled at EU level for so long. The UK is an advanced economy, and research and development is one of our major sectors – this might not be the sexiest element of the crisis, but it is a serious one, and not one that will fix easily.
Adversity and exodus
Planes might still fly, and in a pinch steps would be agreed to keep emergency and essential supplies coming into the country – at least after a short while – but there is nothing that could be done to stop no-deal causing a crash to the UK economy even larger than the 2008 financial collapse.
It would be ridiculous to suggest the UK would be the only country affected by this calamity: when Greece stood on the brink of collapse, the effects of its crisis were felt across the EU, and even in the economies of the wider world. The UK is one of the six biggest economies in the world, and is the world’s primary financial hub – Brexiteers are not wrong when they say the EU and others would be harmed by no-deal. The world could easily be plunged into recession.
Where Brexiteers are wrong, though, is that we would definitely be the hardest hit. Official estimates suggest unemployment could jump to around 8%, GDP could crash around 5%, and the pound and stock markets would each take a serious battering.
When said as figures, this doesn’t sound especially dramatic – but it would be an absolute disaster for the country. It would be the loss of tens or hundreds of thousands of jobs, the collapse of numerous businesses, and a huge surge in people relying on the welfare state – and would need a huge government response, just at a time when the UK could struggle to borrow and face mounting interest rates.
We would be at the beginning of an economic crisis on a larger scale to 2008, with less ability to respond – and wages and conditions in the UK have yet to catch up with where they were before even that, lesser, crisis.
There would be one piece of good news for Theresa May in all of that at least: economies facing these kinds of situations don’t have to worry about immigration – at this point, the UK would be facing an emigration crisis, as hundreds of thousands of skilled workers who could get out would quickly try to. That’s one wish granted, at least.
Once the initial chaos and confusion settles, we could expect Westminster politics – to one extent or another – to reshape themselves entirely. Many options would be off the table. No-one would still be able to cry “project fear”. Millions of voters would feel, rightly, deeply betrayed and let down by their politicians. We would be in the middle of a once-in-a-generation crisis.
There is no way the weak government that led us into that crisis would be allowed to shape the long-term response to it. There would be no way to predict what options could be on the table, what leaders, or even what parties might be standing – but we could predict with near-certainty that as soon as the first dust settled, we’d be back at the polls for what could prove an even more radical vote than the 2016 referendum. Sorry, Brenda from Bristol.
There are many names for no-deal Brexit: a cliff-edge, a catastrophe, a disaster. We should just never let anyone get away with calling it “clean” ever again.