Unless the European Union and the United Kingdom agree on a post-Brexit deal in the next few days, both sides risk entering the new year without any negotiated arrangements in place for the future.
Whether or not there is an agreement, rules on trade and many other areas of life will change significantly when the transition period expires and the UK leaves the EU”s Single Market and Customs Union.
But the disruption and costs would be magnified should no agreement be reached on trade and future ties. With no new trade deal in place, both sides would operate under World Trade Organization (WTO) rules from January 1, bringing tariffs and non-tariff barriers.
Meanwhile, many other aspects of the future EU-UK relationship, from services to security cooperation, would be left in limbo.
Below is a selection of comments from various politicians, trade bodies, individuals and others on what such a “no-deal scenario” would mean.
Johnson: a ‘good outcome for UK’, but industry begs to differ
(If there is no deal)… “We will then have a trading arrangement with the EU like Australia’s. I want to be absolutely clear that, as we have said right from the start, that would be a good outcome for the UK. As a Government we are preparing, at our borders and at our ports, to be ready for it. We will have full control over our laws, our rules, and our fishing waters. We will have the freedom to do trade deals with every country in the world. And we will prosper mightily as a result.” — Boris Johnson, UK Prime Minister, October 2020.
“The economic costs associated with such an outcome (trade on WTO terms) would be additional to the 4 per cent long-run loss of output associated with leaving the EU with a typical FTA (Free Trade Agreement) that is already in our central forecast… A no deal Brexit is estimated to reduce real GDP by around a further 2 per cent in 2021.” —UK Office for Budget Responsibility, November 2020.
“The risk of a no deal is real. It would lead to cascading consequences for our businesses as well as for our citizens: customs duties, controls, bureaucracy, delays, blockages, outsourcing and so on… A brutal split between continental Europe and the UK would add further difficulties to the difficulties and would undermine tens of thousands of jobs and activities in all our countries.” —Joint call from heads of major business organisations in France, Germany, Italy, October 2020.
“A no-deal scenario … would be disastrous for manufacturing and for the millions more employed in supporting industries both here in the UK and across the EU…. The impacts would go far beyond disruptions in trade at the border. Families and communities would be left hanging in the balance, affecting real people who need the well-paid jobs that manufacturing provides… The COVID crisis has had an incredibly damaging impact across the UK and Europe… Should we face the challenge of an acrimonious exit without a deal, businesses in the UK and Europe are united in the view that they are not and cannot be ready for the disruption that we face.” —80 UK and EU manufacturers in a joint appeal, October 2020.
“A Hard Brexit could cost as much as €33 billion in annual exports to the EU, with Germany (€8.2bn), the Netherlands (€4.8bn) and France (€3.6bn) hit the hardest… In the event of a no deal on 1 January 2021 (probably announced after mid-November to allow at least one month of preparation), the UK could see a -5% contraction in GDP and a -15% drop in exports, besides inflation beyond 5% for at least six months.” —Euler Hermes/Allianz report, October 2020.
EU and UK tariffs under WTO rules “would result in additional burdens for the German export industry amounting to billions of euros and possibly also affect the re-import of previously exported goods.” — German Chamber of Commerce (DIHK), 2020.
Car industry would face 10% tariffs
“Without a deal in place … tariffs – far higher than the small margins of most manufacturers – would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand… New calculations suggest that, for cars and vans alone, a reduction in demand resulting from a 10% WTO tariff could wipe some three million units from EU and UK factory output over the next five years, with losses worth €52.8 billion to UK plants and €57.7 billion to those based across the EU. Suppliers would also suffer from these changes.” — European Automobile Manufacturers’ Association (ACEA) and the European Association of Automotive Suppliers (CLEPA), along with 21 national associations in a joint appeal, September 2020.
“WTO tariffs would add an average £2,000 to the cost of British-built electric cars sold in the EU, making UK plants considerably less competitive and undermining Britain’s attractiveness as a destination for inward investment… Meanwhile, these tariffs would mean a £2,800 hike per EU-built vehicle for UK consumers.” — UK Society of Motor Manufacturers and Traders (SMMT), November 2020.
A ‘double whammy’ for farmers and food
“The prospect of negotiators failing to reach a deal on future EU-UK trade relations will result in a devastating double whammy for farmers, agri-food businesses and traders who are already struggling to cope with the Covid-19 pandemic.” — Joint statement from Copa-Cogeca, Celcaa, and FoodDrinkEurope, three bodies representing the EU agri-food chain, September 2020.
“We’ve been clear for four years now that a no-deal for agriculture is catastrophic… We (would be) priced out of the market. You’d be looking at enormous tariffs on every sector – 62 per cent on lamb, 85 per cent on beef, 51 per cent on malt and barley. It would be very savage and a total cost of £1.36 billion pounds in tariffs.” — Minette Batters, UK National Farmers Union (NFU) President, BBC Radio, December 2020.
“The impact of no deal Brexit will disproportionately affect the food and beverage sector, particularly fresh produce… The average tariff when exporting food and beverage products from the EU to the UK will rise from 0% to 17.7%… The average tariff when exporting food and beverage products from the UK to the EU will rise from 0% to 21.7%.” — London School of Economics (LSE) report for Scandinavian dairy multinational Arla Foods, September 2020.
“If there’s no deal, it’ll privilege the large importers like the large supermarkets, people that can afford to order big volumes… This is going to prejudice the small entrepreneurial wine shop, restaurant owner, wholesaler. The extra costs of us re-labelling and analysing wine, we’ll have to pass it onto them. And it’ll make their costs of import so much higher than the big guys.” — Tim Ford, Managing Director, Domaine Gayda, wine exporter from France to UK.
UK fishing industry eyes chance to balance the scales
“There is no disguising that (no deal) would carry serious adverse implications for both the UK and many EU member states… No deal would also mean that the EU will immediately enter negotiations with the UK… for an annual fisheries agreement for 2021, with no prior guarantee that EU fleets would have access to fish any part of UK waters from 1st January… In the absence of a fisheries agreement for 2021, something like 3000 EU fishing vessels will have no legal access to fish in UK waters, until there is an agreement.” — UK National Federation of Fishermen’s Organisations (NFFO), December 2020.
“There must be a deal, if there is no deal, whether it’s regional fisheries or the local fleet, it would mean a certain death… If we are in French waters, we will find ourselves with Belgians, Dutch, Spaniards, so there will be an overexploitation of resources. We must not overexploit the resource.” — Olivier Leprêtre, President of Hauts-de-France Regional Fisheries Committee, December 2020.
“For Brittany there are 130 boats which exercise a significant part of their activity in British waters and would be gravely affected. Their activity represents a third of landings in Breton ports… There will be very strong disruption… But that does not mean there will be no deal afterwards, nor that 130 crews will find themselves out on their ear the next day… Europe has already planned support funding for fishing businesses hit by Brexit.” — Jacques Doudet, Brittany’s Regional Committee for Sea Fisheries and Marine Farming, November 2020.
Fears for drugs supplies and security
“For the life science sector, irrespective of our readiness, such a result will, in the short-term, introduce disruptions to medicine supply chains causing delays in access to medicines for both EU and UK patients and, in the long term, reduce the competitiveness of the EU and UK life science hubs vis-à-vis the US, Japan and China.” — the heads of five pan-European pharmaceutical and biotechnological bodies in a joint letter to EU leaders, June 2020.
“EU pharmaceutical total exports are expected to drop by 1.2% in the event of a no deal.” — EFPIA (European Federation of Pharmaceutical Industries and Associations), July 2020.
“The potential loss of access to Europol in a NNO (non-negotiated outcome) is the tool area we are most concerned about from a SOC (serious organised crime) perspective… The multilateral coordination and specialist analytical services offered by Europol cannot be replicated through bilateral channels. Information exchange will be slower, more labour intensive, and opportunities to identify new intelligence leads could be diminished without access to the extensive data held on Europol Analysis Projects.” — Steve Rodhouse, Director General Operations, UK National Crime Agency (NCA), November 2020.
“If we have increased differentials in terms of tariffs and other issues around the border, then we will end up with a potential bonanza for organised crime.” — Naomi Long, Justice Minister in the Northern Ireland Executive and leader of the Alliance Party, November 2020.
The final word to a Johnson supporter…
“Mr Johnson’s optimism that under WTO rules Britain, like Australia, will be able to sustain its trade relationships with Europe and the rest of the world is well-founded… Conducting its trade relations under WTO rules with countries across the world, including Australia, with which it is negotiating a free-trade deal, will open up vast new opportunities for Britain.” — Editorial, The Australian, December 2020.