15/03/2017 11:26 GMT | Updated 15/03/2017 11:27 GMT

David Davis Reveals Government Has Not Studied Economic Impact Of Leaving EU With No Trade Deal

'It's not as frightening as some people think.'

Leon Neal via Getty Images

Brexit secretary David Davis has revealed the government has not made an assessment of the economic impact on the UK of leaving the EU without a trade deal.

Theresa May has said that “no deal” with Brussels on a future trading relationship is “better than a bad deal”.

The failure to strike a deal would leave the UK trading with the EU on World Trade Organisation (WTO) terms which could mean the imposition of tariffs and border checks. 

Labour said the government was behaving “recklessly” by failing to examine the impact of leaving the EU with no deal in place.

Appearing before the Commons Exiting the European Union Committee today, Davis was asked by its chairman if the government had undertaken studies into what the impact of no deal being struck would be.

The Brexit secretary said while the government “made an estimate during the referendum campaign” those forecasts “don’t appear to have been robust”. 

Asked if an economic assessment had been made since the June 23 referendum, Davis said: “If you mean under my time, no”.

And he said “most, if not all” forecasts about the economic impact of Brexit “have been wrong”.

Davis said while he wanted a trade deal to be reached, trading on WTO rules would “not be as frightening as some people think”.

His comments came as the European Council president Donald Tusk said that Europe will not be “intimidated” by British threats to walk away from trade talks.

Leaving the EU under WTO rules could mean 30-40% on agricultural exports and 10% on cars, the loss of EHIC health insurance cards for travellers and passporting rights for financial sector firms, as well as departure from the EU-US Open Skies arrangements for air transport.

Labour shadow Brexit secretary Keir Starmer said: “The government is recklessly talking up the idea of crashing out of the EU with no deal. They have repeated the mantra that ‘no deal is better than a bad deal’.

“But we now know they have made no assessment of the economic impact of the Prime Minister failing to secure a deal.

“What’s clear, from the CBI and others, is that there is no result that would be worse for the British economy than leaving with no deal; no deal would be the worst possible deal.

“The Government should rule out this dangerous and counter-productive threat before Article 50 is triggered.”

Davis has briefed Cabinet colleagues to be ready for the “unlikely scenario” of the UK crashing out of the EU without a deal - a prospect which Foreign Secretary Boris Johnson said this weekend would be “perfectly OK”.

Explaining May’s “no deal is better than a bad deal” mantra, Davis said: “She said that because in the emotional aftermath of the referendum, there were lots of threats of punishment deals and all the rest of it. 

“We had to be clear that we could actually manage this in such a way as to be better than a bad deal, and that is true.”

Davis also appeared to take a swipe at Johnson’s TV interview comments, telling the committee: “I do my job on the basis of facts and data and research and analysis and operational planning, and off the back of that I will give answers that are accurate and factual - not throwaway lines in interviews, factual answers.”