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The cons resulting from exiting the EU without a deal far outweigh the pros says think tank The UK in a Changing Europe in its report The Cost of No Deal Revisited, published September 3, 2018. Anna Tobin examines its findings
The academic think tank finds that the negative impact of a no deal Brexit exceeds any positive benefits that would result from this scenario. If the UK fails to sign a withdrawal agreement, in the short-term, the report warns, many of the rules governing the UK’s economic and regulatory structures would disappear without an immediate replacement. Agriculture, financial services, air transport and drugs would be the areas the think tank claims would be most impacted. It will also be problematic for EU citizens in the UK and British citizens living elsewhere in Europe.
There could be a positive boost to the UK GDP in the run-up to no deal, however, as a result of preparedness spending and stockpiling by business and consumers. The economic situation becomes much worse after no deal though, when businesses could be hit by rising input prices, resulting from the fall in sterling, and consumers could face rising inflation. Some businesses, particularly those in the manufacturing, retail and logistics sectors, could see their supply chains disrupted or severed. “Firms and sectors heavily dependent on just-in-time supply chains including almost all UK supermarkets, UK medical supplier networks, and most online retail services will be severely impacted by customs and border checks,” the report states.
“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,” says Professor Anand Menon, director of The UK in a Changing Europe. “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.”