Yahoo Finance Brexit no-deal will spawn 'legal morass and economic disaster'
A Brexit ‘no-deal’ could hurl the UK into “chaos”, forcing the value of the pound plummeting further, increasing inflation and sending wages tumbling, a major think-tank warns.
This could also consequently lead to a fall in business confidence, resulting in a slowdown in investment.
The report, by The UK in a Changing Europe, assessed the consequences should the UK land itself in what it terms as a ‘chaotic Brexit’ – the event where the UK fails to secure an Article 50 or trade deal with the EU.
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In this event, nuclear plants may not be able to operate; British airlines might be unable to fly; and both UK citizens in the EU and vice versa would find themselves in legal limbo, it said.
The report shows that a chaotic Brexit might come about in two ways:
A premature Brexit: where talks break down acrimoniously with the UK unilaterally ceasing to pay its EU contributions and ending the supremacy of EU law in the UK with immediate effect
A timed out Brexit: where the talks do not completely break down, but no agreement is reached within the two year period and there is no extension.
Professor Anand Menon, director of The UK in a Changing Europe, said: “Our findings show a chaotic Brexit would, at least in the short term, spawn a political mess, a legal morass and an economic disaster. This report makes it clear ‘no deal’ is an outcome the British government must strive to avoid.
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“’No deal’ doesn’t mean the country would come to a stop. But even under relatively benign conditions and with time to prepare, the impacts would be widespread, damaging and pervasive.”
Further concerns raised by the think-tank include those for the cross-border business operations, which it said could be affected by the enforcement of contracts which would prove costly and time consuming for British firms exporting to the EU.
This would lead to a disruption in complex cross-border supply chains, as the UK would be subject to the same requisite customs checks, tariffs and regulatory barriers that apply to the US.
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The report also warned that a no-deal would have “serious political and economic implications” for Northern Ireland. Leaving the single market and the customs union would mean a return to “some form of hard border”, meaning the country’s agricultural sector, which is closely linked with the Republic of Ireland, would be disrupted and could encourage the illegal movement of animals and goods.
It also raised concerns about the area’s political situation, raising concerns that a ‘no deal’ would “further destabilise an already unsettled situation”.
