Expert View

So, prime minister, what does “no deal” really mean?

by David Hannay | 23.05.2017

David Hannay is a member of the House of Lords and former UK ambassador to the EU and UN.

Now that the prime minister has, in her Andrew Neil interview on Monday, promoted “no deal is better than a bad deal” to her top mantra, in place of the equally opaque and meaningless “Brexit means Brexit”, it is surely high time to subject it to a bit of critical analysis. In doing so we have little to go on from the government which has proclaimed it so vociferously but which has neither set out what a bad deal might consist of, nor, more importantly, what the negative consequences of there being no deal might be.

It is not as if the government seems to be of one mind on this. Boris Johnson says that leaving without a deal would be “perfectly OK”; Theresa May, wisely, admits that there would be negative consequences but does not spell out what they might be; and David Davis hints that he is spending a lot of his time working out what the implications of no deal might be, which indicates that the government has nailed its colours to that mast without actually knowing what the consequences might be.

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Setting out those negative consequences is not exactly rocket science. On trade, we know perfectly well what falling back on World Trade Organisation rules would entail because we already apply those rules to our imports from third countries (which is one of the reasons why countries like South Korea, Canada and Japan have been so keen to negotiate free trade agreements with the EU to avoid them).

It would entail our exports to the EU (44% of our total exports) paying the Common External Tariff and facing a number of non-tariff and regulatory barriers and time-consuming customs procedures which they currently escape; and it would entail subjecting our imports from the EU to similar treatment with adverse consequences for consumers. No doubt the effects of those changes cannot be calculated to the last decimal point but businesses and individuals would know broadly what to expect.

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We know too that our service industries, financial services in particular, would lose their control-free access to some of their biggest markets. We know that we should have to replace some 30 or so regulatory agencies on which we rely for Europe-wide clearance. We know that we would go over a cliff-edge and lose our membership of Europol and Eurojust; our access to a whole range of crime-fighting information systems; and the use of the accelerated and simplified extradition procedures of the European Arrest Warrant. All these, and many other, losses are known knowns.

And then there is the question of who is to decide that no deal is better than a particular deal on offer. The government has said that any deal it negotiates will be submitted to both Houses of Parliament for decision. But, when an attempt was made to entrench that in statute in the Article 50 Act, they flatly rejected it and they refused to give any undertaking at all to submit to parliament any decision they might make to crash out without a deal. So that oft-repeated mantra really is a blank cheque.        

It may be, as May suggested, that some people do regard any deal as better than no deal. But that is not what is at issue here. What is at issue is whether the government is going to come clean on the consequences of there being no deal; and whether it would submit its judgement on that matter to parliament. Since a decision to leave without a deal would affect every citizen and every business in the land, that would not seem to be asking too much.

Edited by Hugo Dixon

2 Responses to “So, prime minister, what does “no deal” really mean?”

  • As to the ” no deal ” implications, INFACTS readers, and Mr Hannay and Mr Dixon ,should consult the latest newsletter from the Federal Trust. It contains a detailed economic analysis ranging over 50 or so sectors of the economy of what would happen in the case of no deal. The results of this analysis, apparently the first of its kind , are needless to say depressing for the UK. In the same newsletter there is a report of a recent conference attended by experts from the City on the implications of Brexit on the City of London. The conclusions are more than frightening for the future of the City and indeed therefore for the country. In particular it is stated that the government officials dealing with these matters ( No 10 and the Exit Brexit department and no longer the Treasury which has been sidelined for this activity) have no real understanding of the matters involved to the point of real incompetence. All of this could have the gravest consequences for the UK but one is still left wondering how these things could possibly be taking place.
    I now realize that Monsieur Barnier and the EU negotiating team’s role will in part be one of educating the UK negotiators ( and via them the UK public ) on the dreadful consequences of Brexit.

  • How much time do EU citizens get to leave the UK to live an other EU country for example woman is Polish Man is British born but 70 % Irish 17% western European 13% other seems to me European is a birth right?
    And if Grand Children are Polish why stay in anti european England.