Leavers and Remainers make the same mistake of talking as though it is a coherent outcomeby Alex Dean / May 14, 2019 / Leave a comment
What would a no-deal Brexit look like? Three years since the referendum this issue has been debated more than perhaps any other. The European elections on 23rd May will revive the question. And yet all sides seem to have reached the wrong answer.
Prominent Leavers of course downplay the potential damage. Nigel Farage’s Brexit Party insists there is nothing frightening about us quickly adopting WTO terms. Nigel Lawson meanwhile told me recently “I think this is the only acceptable outcome, and it is in a sense the default position because we are committed to leaving.” Remainers take the rather different—though more plausible—view that it would be catastrophic.
But the truth is that both sides have missed something. For both camps, a no deal Brexit is talked about as though it is a coherent outcome. For good or ill it is a destination where Britain might end up.
This is a fundamental misunderstanding, because in fact there is no such thing as a long-term no-deal. It is not really an end point at all, but instead the start of a humiliating process. What’s likely to happen is that after storming out of talks, we will begin to row back, and in the end will accept something very similar to the withdrawal agreement that was on offer in the first place. The Brexit debate rarely takes this into account. But it is key if we are to assess Britain’s options in the months ahead.
So what happens if we crash out? Not what you might think.
The immediate consequence is indeed that we fall back on the infamous “WTO terms.” Championed by Leavers, for most economic forecasters (including the government’s) the damage would be immense. Severing links with our largest trading partner would throw the economic system into disarray. Cross-border trade flows would grind to a halt. Sensible Brexiteers concede that it would at the very least be disruptive.
But it would also be unsustainable. And that word is key. For the truth is that the situation could not—and would not—continue. It would not be allowed to.
The reality is that businesses need to trade and goods need to travel. A major economy like Britain needs an overarching deal with its largest trading partner. Forty-five per cent of our exports go to the continent. A government might threaten “no-deal” but no administration could sit…