What could a no-deal Brexit mean?

European Commission President Jean-Claude Juncker (R) shakes hands with British Prime Minister Theresa May during their meeting in Brussels, Belgium, on Wednesday. (Xinhua/Ye Pingfan).

LONDON – As talks and negotiations on Brexit continue, teams in both London and Brussels are working behind the scenes on the unthinkable. What will happen if Britain leaves the European Union (EU) on March 29, 2019 without any deal?

Such a “hard departure” cannot be ruled out. Hence both sides need to be prepared for the possible consequences. Yet, seasoned politicians also lay out a possible scenario when a deal emerges like a rabbit out of a magician’s hat at the final seconds.

Under provisional arrangements, nothing would change when Britain ends its EU membership on March 29, 2019, with a 21-month transition period aimed at giving Brussels and London more time to work out a permanent trading relationship. 

However, if a no-deal scenario happens, there will be a clean cut from the EU. 

No deal may spell chaos

Fears have been raised of massive queues of freight vehicles on both sides of the English Channel, and possible supply shortages of food and goods for Britain.

Major British manufacturers, particularly in the auto business, could face chaos, as they rely on an arrangement known as “just in time,” meaning a continuous procession of parts and components from mainland European suppliers being delivered directly to their plants.

Britain would have to operate under the World Trade Organisation rules, but this would mean tariffs on goods shipped to EU countries. Shipments could be delayed or rejected if vital paperwork and certifications are not available.

Worries also have surfaced about cross-channel air travel, which runs a risk of jets being grounded. Also, EU countries would be exporting to Britain as a third-party country.

Although British Prime Minister Theresa May has said there would be no change in the status of the 3 million EU citizens living in Britain, there could be migration implications for both sides.

There are also over 1 million British citizens living in EU member states. A major flashpoint would be the 500-km border between Britain-controlled Northern Ireland and the neighboring Irish Republic. Border posts are likely to return to the area, which will become a physical EU zone border.

The need to create a frictionless border on the island of Ireland has been one of the most difficult issues to be resolved during the Brexit negotiations. One consolation would be that Britain would no longer have to pay its contribution to the EU, estimated at around 13 billion British pounds (16.7 billion U.S. dollars) a year.

On March 29 next year, Britain would leave the EU and “everything associated with that would come to an end,” said Simon Usherwood, a political expert from the University of Surrey, in a recent media interview.

“A no deal doesn’t stop the UK from leaving but it means there is absolutely no clarity about what happens ...,” Usherwood said.

Anthony Glees, director of the Center for Security and Intelligence Studies at the University of Buckingham, said the grim prospect of a no-deal outcome makes May’s Brexit proposal sound sensible.

“I don’t think any British government could survive the collapse of sterling, the need to borrow more and practice austerity, stasis at our main ports, mass unemployment of industrial and agrifood workers, decline in services industry, labor shortages in the National Health Service, declining investment and more expensive food from Europe,” Glees told Xinhua.

Choices after no deal

If members of the parliament vote down May’s Brexit plan, leading to a no-deal Brexit, the loss would be 81 billion pounds (105.3 billion dollars) each year for the foreseeable future as predicted by the British government, said Glees.

“There would be massive borrowing and the collapse of sterling,” he said.

He cited the viewpoint of Charles Grant, director of the Center for European Reform, saying there are four choices after a no-deal Brexit – Britain leaving with no deal, the parliament telling May to have another go, the parliament collapsing in further chaos with May forced into a general election, and fourthly, a new public referendum on EU membership.

“I think (the) Labour (Party) would probably win a general election, while a new referendum might, or might not produce a different result,” Glees said. He also predicted that a no-deal departure would mean a hard border in Ireland. “A hard border in Ireland means we return to sectarian violence as surely as night follows day.”

“Yet if we do not share the ‘common rule book’ with the EU, we have different tariffs and non-tariff regulations and we need a hard border for economic reasons. We also need one for political reason because Brexiters are afraid of migration from the EU,” he said.

“Northern Ireland would have an open door to EU27 (EU excluding Britain) migrants via Ireland without controls on the long land border,” he noted.

Brexit is already having an impact on the fortunes of Britain, he added. “It is weakening us ... Investment in the UK has already slumped by half in the past year, numerous firms and businesses are relocating into EU27 countries. We will take years to recover from the damage that has already been done,” he said.

Glees predicted that if a no-deal Brexit seems likely, the British parliament will step in. May’s government has already produced a string of “just in case” documents spelling out the consequences.

This is seen as an insurance policy strategy although May has continually said she is confident of striking a deal with Brussels that respects the 2016 referendum decision of the British people.