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Analysis

Good luck ‘managing’ no-deal Brexit chaos

by Luke Lythgoe | 17.12.2018

Brexiters are now pushing for a “managed no deal Brexit”. This may sound comforting, but don’t be fooled. Crashing out of the EU without a deal cannot be “managed” well. It means turmoil.

The “managed no deal” label is actually being applied to two rather different types of hard-Brexit options.

There’s the Jeremy Hunt version, supposedly involving “quick” agreements which could be made if no deal emerged by March 29, covering things like “transport disruption, flights, visas and stranded holidaymakers”. The foreign secretary’s scheme is “no deal”, in the sense that there would be no divorce deal let alone a future trade deal.

Then there’s Penny Mordaunt’s idea that seems to involve signing a withdrawal agreement and, in return, keeping the 21-month transition period to cushion the blow of Brexit. The twist in her proposal is that we would only pay half our divorce fee – £20 billion rather than £39 billion – and, it seems, we would also dispense with the Irish “backstop”.

Both schemes are unicorns. They don’t exist as real options.

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Hunt and Mordaunt are making the same mistake Brexiters have been making since 2016: assuming that if only the UK showed it was serious about walking away the other 27 EU countries would bend over backwards to accommodate us.

But the other European governments prize the integrity of the EU’s single market over access to the UK. And because we need them more than they need us, we will be under pressure to agree terms.

While both the UK and the EU would suffer if there is no-deal chaos, we would be hit much harder. Many of our preparations to offset this chaos (managing trade at Dover, for example) depend greatly on the buy-in of our partners in Europe (managing trade in Calais).

So Mordaunt’s idea that the EU will give us a transition deal and dispense with the backstop in return for half what we agree we owe them is for the birds. And Hunt’s hope that it will give us lots of mini deals is extremely optimistic. The other countries will give us continuity where it suits them; otherwise, it will extract a hefty price.

And even if we can patch together mini deals, leaving the EU without an overarching agreement will cut us off from many important parts of the European market. This will clobber our economy, causing international firms to shift operations and domestic traders to fold, with grim consequences for jobs and workers.

Nobody voted for that in 2016. Foisting it upon an unwilling public is a surefire way to deepen the wounds opened by Brexit.

Edited by Hugo Dixon