LONDON—The prospect of the UK leaving the EU without a bespoke Brexit deal has spooked markets, businesses, and European governments in recent weeks, and has critics demanding that the British government step up preparations.
But the UK’s first guidance on a “no-deal” scenario, published Aug. 23, did little to allay concerns in the business community, with some sectors saying it was too little, too late, demonstrating the dangers of a no-deal Brexit.
“I’m confident that a good deal is within our sights. That remains our top priority, that remains our overriding priority,” he said at a speech marking the release of the papers.
Raab admitted that, in the short term, a no-deal scenario was damaging, but insisted that in the long term, Brexit—with or without a deal–is good for the nation.
The papers, 148 pages in total, confirmed that in a no-deal scenario “the free circulation of goods between the UK and EU would cease.”
Josh Hardie, deputy director-general of business organization CBI, said a “no deal” would “wreak havoc on economies across Europe.”
“The government’s technical notices demonstrate the facts of a no-deal Brexit—reduced availability and higher prices of food and medicine, increased delays, and red tape at borders, and a VAT bombshell,” she said.
The advice papers suggest that in the event of no deal, the UK may attempt to make piecemeal micro-deals with the EU on issues such as nuclear regulation, insurance, and medicines.
The UK shares a vast regulatory framework with the EU, from workers rights, advertising regulations, to trade and customs.
The advice papers point to certain areas where the EU law will be carried over to the UK automatically.
In other areas, however, markets are worried that without a deal in place, the regulatory gap won’t be plugged in time before the UK leaves the EU on March 29.
“Specifically for food, today’s notice about organic food certification makes clear that UK organic exporters may face a ban on their exports to the EU for at least nine months after a no-deal exit, while new approvals for certification are sought.”
Before the referendum, many experts on EU regulations and policy had warned that leaving the EU framework would be very complicated.
However, many Brexit hardliners dismiss the warnings over a no-deal scenario and other economic warnings as part of “project fear” cooked up by EU supporters to thwart Brexit.