THE BLOG
19/11/2018 16:44 GMT | Updated 20/11/2018 15:27 GMT

This Is What Will Happen To The UK If There's No Brexit Deal

Politically, it might save face for the Conservatives in what has become a truly hazardous political situation. But legally and therefore practically, it will be a disaster for Britain

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Last week, Theresa May agreed a draft Brexit deal with the European Union in Brussels. This could have been a key stepping stone towards the resolution of the UK’s future in the EU – but things have gone awry again since then.

The deal struck between the UK government and the EU is, in broad terms, a “soft Brexit”. It avoids a hard border on the island of Ireland but putting in place a “backstop” on the Northern Irish border, which effectively retains some EU rules for Northern Ireland until new trade agreements have been finalised.

The EU originally wanted to keep Northern Ireland in its single market and customs union, however the UK government feared this would threaten their territorial integrity. So the solution has been that the whole of the UK will remain in the single market under the backstop until trade agreements that avoid a hard border in Ireland are worked out. In return for this concession, the EU insisted that the deal include a clause stating that the UK cannot withdraw from the backstop without the Union’s permission.

Hard Brexiteers are strongly against the deal as they fear the mandatory backstop could leave the UK ‘trapped’ in the EU and its market. The deal also didn’t satisfy the Democratic Unionist’s Party as it includes ‘deeper’ customs checks at the Northern Irish border, which violates the party’s insistence that Northern Ireland should be treated no differently to the rest of the UK in the withdrawal agreement.

This means it may prove very difficult for the deal to survive as it currently stands. In 2017, the UK Supreme Court ruled that the government could not use its royal prerogative to withdraw from the EU and that it can only do so via an act of parliament. This means May’s deal will have to gain majority support in the House of Commons – not an easy feat with an unpopular deal and a minority government.

In the midst of this uncertainty, four cabinet members had resigned at the time of writing and many more have reportedly sent letters of no-confidence to the Prime Minister. Whispers abound about a change of leadership but May says she is determined to stick it out. Some corners are renewing calls for a second referendum – a ‘peoples’ vote’ – but Labour leader Jeremy Corbyn said yesterday his party would not support such a vote at this stage.

So if the parliament cannot agree on the deal and a second vote is not on the cards – what are we left with? We are inching, it seems, ever closer to the prospect of a ‘No Deal’ Brexit.

Importantly, despite how it sounds, No Deal Brexit does not mean that Brexit is off – it means that the UK will cut ties with the European Union on the 29th of March 2019 – two years after May gave formal notice to the EU of the UK’s intention to leave –  without a withdrawal agreement being in place.

This will mean there will be no agreement about how to transition the UK out of the single market or the customs union, and no agreement about the rights of UK citizens in the EU and vice versa. It will mean that Britain is simply severed from the Union and its laws, and everything will lie where it falls. There will be a large legal and foreign policy hole where comprehensive EU laws and regulations used to be.

So what will that look like? Legally, it will be a nightmare. Firstly, without a deal there will be no ‘transition period’ for the UK to renegotiate trade deals once it is out of the EU. This means trade in the UK will all of a sudden be almost lawless; a ‘cliff edge’.

The moment the Lisbon Treaty is severed, the WTO rules would kick in to fill the gap left by the EU laws. WTO laws require customs checks and border control at every border for all goods coming into, and out of, Britain. These checks would have to be set up immediately and would slow down trade across all sectors.

Some sectors will also be affected by the WTO law that says that a country cannot have special rules for certain other nearby countries and not others – this means that the UK would all of a sudden be facing tariffs on goods imported from Europe. UK farmers, auto manufacturers, livestock and produce would all be subject to higher tariffs before being able to export them to our European trading partners.

Imports would also suffer under the sudden change of law and consumer prices would likely rise sharply for many industries.

The Treasury has suggested that the combined effect of a legal ‘cliff edge’ on trade could push the economy into recession.

So a No Deal Brexit and an immediate legal shift to WTO rules would be a disaster for Britain. But can it be avoided? What options are left on the table?

If Theresa May cannot pass her current draft deal through the House of Commons one of three things could happen. First, as current rumours suggest, the Conservative party could move to replace her as leader and send a new prime minister to Brussels to take over negotiations and come up with a ‘harder’ Brexit. But, as May herself has pointed out, a change in leader will not change the parliamentary arithmetic, and it will still be a tall order for any prime minister to negotiate a deal that can pass a vote in the House of Commons.

Second, there could be a move towards a second referendum. May originally said this would not happen under “any circumstances” and Labour leader Jeremy Corbyn has also ruled it out for the time being. Legally, this would not be easy either – a referendum cannot be held without an enabling act of parliament, meaning the peoples’ vote would also have to gain majority support in the House of Commons. With many MPs strongly against such a prospect, this seems unlikely.

So each day a No Deal Brexit seems more and more likely. Theresa May has said that ‘no deal is better than a bad deal’. Politically, it might save face for the Conservatives and act as a get-out-of-jail-free card from what has become a truly hazardous political situation.

But legally and therefore practically, it will be a disaster for Britain and for the international rule of law, and we must be realistic about these costs when weighing up the possibility of a No Deal Brexit.