03/09/2018 05:00 BST | Updated 03/09/2018 10:58 BST

No Deal Brexit Would Risk Recession, Warns Leading Think-Tank

'The impact of a no deal Brexit will be severe.'

PA Wire/PA Images

A no deal Brexit would have “severe” consequences and could trigger a recession, a leading think-tank has warned.

In a report published on Monday, The UK in a Changing Europe said the failure to sign an agreement with the EU would leave the million UK nationals living in the European Economic Area in “legal limbo”.

According to the study, a no deal Brexit could lead to a significant increase in domestic food prices - including a 7.3% hike in the cost of meat.

A six-week supply of drugs may also not be enough to cope with the impact of no deal, the report warned.

The think-tank said British airlines would lose access to EU markets in the event of no deal.

According to the study, a recession was “clearly possible” in the short term. And while over the long term the UK economy would continue to grow, it would do at a slower rate.

Theresa May has said she hopes to secure a deal but if one was not reached the UK “would get through it and go on to thrive”.

Professor Anand Menon, the director of The UK in a Changing Europe, said: “Make no mistake, the impact of a no deal Brexit will be severe. In the short term at least, considerable uncertainty and disruption will result.

“While it is wise to plan for no deal, and indeed attempt to mitigate against the worst aspects of a chaotic Brexit, it makes far more sense to avoid such an outcome altogether.”

Labour MP Stephen Doughty, who backs the People’s Vote campaign for a referendum on Theresa May’s final Brexit deal, said the report “underlines how a chaotic no deal Brexit would be disastrous for our country in almost every way imaginable”.

“But the only reasons we’re even discussing this is because the Government is botching Brexit,” he said.

“No-one voted for a bad Brexit deal or for no deal, but that’s currently where we’re heading. That’s why it’s imperative that people take back control of this process with a People’s Vote on any Brexit deal.”

On Sunday former Brexit secretary David Davis branded May’s Chequers Brexit blueprint which triggered his Cabinet resignation as “actually almost worse than being in”.

Davis said he would vote against the prime minister’s plan in any Commons showdown as International Trade Secretary Liam Fox took a swipe at Chancellor Philip Hammond’s no deal warnings.

 The Treasury has said 2033 borrowing would be around £80bn a year higher if the UK fails to secure a deal.

Fox told the BBC: “Can you think back in all your time in politics where the Treasury have made predictions that were correct 15 years out, I can’t, they didn’t predict the financial crisis that happened, no-one could.”