15. No deal

brexit-fact-base-london — Photo of a Yellowhammer by WildMedia/Shutterstock

‘No deal’ would have meant no UK-EU agreement beyond the Withdrawal Agreement
Government found impact of ‘no deal’ would have been significant (even without effects of Covid-19)
- Yellowhammer planning assumptions
UK and EU trade with tariffs on exports to EU and imports to UK (unlike the TCA)
As with TCA, ‘no deal’ would have meant a major increase in non-tariff barriers to EU-UK trade:
- No bilateral UK-EU agreements e.g. fisheries, agriculture
- EU imposes its standard ‘third-country’ tariffs on UK goods exports to EU
- EU does not grant UK regulatory equivalence for financial services nor adequacy for data
- New border procedures and regulatory certification for UK exports to EU: confusion and queues at borders
- New non-tariff barriers damage UK-EU services trade
- Price rises and shortages in shops: notably food
- UK citizens lose rights to freedom of movement in EEA: work, education, travel
- UK benefits from ‘rolled-over’ trade agreements with other countries
Immediate and long-run economic damage for UK on top of Covid-19 effects
- Long-run cost to GDP estimated at 6% (TCA cost 4%)
No agreement on the future UK-EU partnership in critical policy areas
- Defence and security: no basis for future UK participation with EU27 systems and agencies critical for UK security
- Science and education:
  - Loss of Horizon 2020 and Erasmus participation
  - Reduced opportunities and mobility of talent
  - Reduced participation in international science programmes, loss of funding etc.
Longer-term, ‘no deal’ would have meant:
- Worst long-term economic impact of all Brexit options
- Years of post-Brexit negotiations with EU and others
- UK negotiating position would have been very weak