New report warns of possible "economic shock" in case of no-deal Brexit

05 August 2019

A new report by the Institute for Government has highlighted the “huge barriers” facing the UK as it attempts to leave the EU. With less than 100 days to go before the planned exit date, the report stresses the urgency with which the Government must kick-start preparations for a no-deal Brexit.

It comes as Cabinet Office's own internal analysis of a no-deal Brexit shows stark assessments of the potential problems ahead. Dubbed 'reasonable worst-case scenarios', they an impact on medicines supplies and a possible disruption to the food supply chain. 

Prime Minster Boris Johnson has made Brexit his priority, pledging that the UK will leave the EU on 31 October. Yet worryingly, the report suggests the UK was probably more equipped to leave without a deal in March than it will be in October.

The Institute for Government also warns that a no-deal Brexit, where the UK leaves the EU without a withdrawal agreement, poses the risk of an “economic shock” and may necessitate an emergency Budget.

The report claims that a major challenge will be ensuring businesses are ready for a no-deal departure. It states that one in five of the most vulnerable businesses have undertaken limited preparation for a no-deal exit, with other organisations taking a wait and see approach. This is particularly significant for the North East, which exports considerably more goods to the EU than any other region. Our region would be one of the worst hit by a no-deal Brexit, with an estimated loss of output worth £7billion.

The report also cautions that once the UK has left the EU there will be little certainty. It warns that negotiations to seal new trade agreements will be protracted and that a showdown in Parliament is inevitable.

With resources being diverted to no-deal planning and extensive post Brexit trade talks, the report makes clear that very little attention will be given to domestic matters.

North East Labour MEP Jude Kirton-Darling said:

“A no-deal Brexit will do untold economic damage, costing us jobs, trade and growth. I am committed to doing my best to make sure our region isn't left behind, by fighting Brexit and the no-deal disaster Boris Johnson and the Tories have threatened to unleash."

Do you think the North East needs its own voice in the EU exit negotiations?

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