No-deal Brexit 'would put UK in worst trading position of rich nations'
If Britain leaves the European Union without a replacement trade deal its commercial links with the bloc will overnight become less favourable than any other major industrialised nation, a cross-party campaign has warned as Theresa May prepares to trigger article 50.
Research commissioned by the Labour MP Pat McFadden for Open Britain, which campaigns for continued ties with Europe in the aftermath of Brexit, found that no members of the G20 group of richer nations currently interact with the EU without some sort of trade arrangement.
While not all have a formal free trade agreement (FTA), all the countries at least enjoy bilateral arrangements over access for certain industries, or so-called equivalence agreements, often used to help financial services work within the EU.
The prime minister is expected to trigger article 50, the formal starting point for Britain exiting the EU, as early as Tuesday, depending on how quickly MPs can remove amendments to the bill authorising the process imposed last week by the House of Lords.
If a Tuesday deadline proves impossible, the start of exit proceedings could be delayed until the end of the month, to avoid clashing with this week’s Dutch election.
May’s senior Brexit ministers used media interviews on Sunday to discuss what would happen if the UK could not agree a deal over the two-year departure process, bringing instead a default on to standard World Trade Organisation (WTO) arrangements.
The prime minister has previously warned this could happen, using a key Brexit speech in January to argue that “no deal for Britain is better than a bad deal for Britain”.
Boris Johnson went further still on Sunday, arguing that the UK’s economy “would be perfectly OK” if it left without a deal.
“I don’t think that the consequences of no deal are by any means as apocalyptic as some people like to pretend, and actually what we have seen in the budget from Philip Hammond last week are preparations for Britain over the next few years,” he told ITV’s Peston on Sunday programme.
The foreign secretary was immediately contradicted by Carolyn Fairbairn, head of the Confederation of British Industry, who said such a move would be very bad for businesses and “a recipe for chaos on a number of fronts”.
Open Britain, which groups a series of formerly pro-remain MPs from Labour, the Conservatives and the Liberal Democrats, said leaving with no deal would mean the UK “choosing the most extreme position of all major trading nations”.
The research, by the House of Commons library, found that the EU does not currently trade with any G20 member without some sort of preferential trade arrangement in place.
While many of these fell short of full FTAs, some G20 countries, notably Australia and Japan, were now seeking more comprehensive deals, Open Britain said.
That ministers were even talking about the possibility of quitting without a deal “betrays a dangerous complacency” over trade, said McFadden, a Labour MP who works with Open Britain.
“The government is flirting, as a negotiating tactic, with an option that poses huge dangers to UK industry, services and agriculture,” he said.
“This is why it is vital for parliament to have a meaningful say in the negotiations to come, and to have a say on both a free trade agreement and what should happen in the event of no deal being agreed.”
MPs will vote on Monday afternoon on the two Lords amendments to the article 50 bill – one to guarantee the rights of EU nationals in the UK, and another about a meaningful vote on a final Brexit deal.
Both are expected to be removed.
The Brexit secretary, David Davis, said the measure was “a simple bill which is designed to do nothing more than put the result of the referendum into law”.
“And we’re going to do that.
Please don’t tie the prime minister’s hands in the process of doing that, for things which we expect to attain anyway,” he told BBC1’s The Andrew Marr Show.
Davis reiterated that the only final vote allowed on a deal would be a take-it-or-leave-it verdict.
If parliament turned down the agreement presented to it, this would not mean ministers seeking to renegotiate with the EU, Davis said.
Instead, the UK would move to “what is called the most favoured nation status deal with the World Trade Organisation”.
Ministers and officials were already planning for such an outcome, Davis said, while stressing it was not a favoured option.
“Understand, it’s a contingency plan – the aim is to get a good outcome,” he said.
Liam Fox, the international trade secretary, said his department was setting up a committee specifically tasked with examining what might happen if there were no EU deal.
This was, he told Sky News’s Sophy Ridge on Sunday, not the hoped-for outcome.
“Of course it would be bad. But it would not just be bad for the UK, it’s bad for Europe as a whole,” he said.
One leading Conservative rebel on Brexit said she feared some hardline elements in the government were deliberately trying to steer the nation towards a default to WTO rules, to make a clean break with the EU.
Anna Soubry said that if Davis would not guarantee a meaningful Commons say on the future if no deal were reached, she would consider rebelling to keep in place the Lords amendment on the vote issue.
“I want a commitment from him that in the event of no deal it will come into parliament and parliament will determine what happens next,” Soubry told BBC1’s Sunday Politics.
She added: “The question people have to ask is: why won’t the government give that commitment?
And my fear is that what this is really about is us deliberately – not the prime minister, but others – ensuring that we have no deal.”