The Economist

The EconomistAugust 4th 2018 19

For daily analysis and debate on Britain visit

Economist.com/britain

1

T

HE lure has always been powerful.

Why negotiate with an organisation

you dislike which also wants to erode any

gains from leaving? Why not just walk out?

After all no deal is better than a bad deal

as Theresa May has often said.

Talk of a no-deal Brexit has revived

strongly since the prime minister laid out

fresh negotiating objectives in a meeting at

Chequers her country house last month.

ToryMPs report deep dissatisfaction in the

party with the plan which many Brexi-

teers think gives too much to the EU. Two

cabinet ministers resigned for the same

reason. Worse Brussels wants more. Muj-

taba Rahman of the Eurasia Group a con-

sultancy says that behind the EU’s cau-

tious public welcome for Chequers the

private view is very negative.

Faced with such recalcitrance on all

sides Mrs May is reviving no-deal plan-

ning. Dominic Raab her new Brexit secre-

tary talks of stockpiling food and medi-

cine. Jeremy Hunt the foreign secretary

says the probability of no deal is increasing

by the day. The government will soon pub-

lish advice to businesses and individuals

of the possible impact. The European

Commission has issued similar notes.

A no-deal Brexit sounds simple but it

comes in several guises. One is as a negoti-

ating tactic to strengthen Britain’s weak

bargaining position. But this works only if

the threat of no deal is credible and few

agreed terms notably a £40bn ($52bn) exit

bill a guarantee ofEUcitizens’ rights and

averting a hard border in Ireland. That

would surely make a no-deal exit acrimo-

nious thereby aggravating its effects. A

new study by the IMF finds that these

would be bad for all EUcountries especial-

ly Ireland and those near the Channel. But

they would be worst for Britain (see chart).

Many Brexiteers refuse to accept this. To

see why they are wrong start with trade.

Brexiteers argue for trading on World Trade

Organisation (WTO) rules as most non-EU

countries already do. Yet with no deal Brit-

ain would be the only big country trading

solely on WTOterms. Others even those

without trade agreements in place have

side deals to facilitate customs inspections.

Reverting to the WTOis also tricky. Britain

is a member but to take up its rights it must

divide import quotas with the EU. Efforts

to do this have been opposed by America

Brazil and even New Zealand.

Nor would trade with other countries

be trouble-free. Britain benefits from the

EU’s trade deals with 50-odd countries in-

cluding Mexico South Korea and Japan.

Britain hopes to roll these over after Brexit.

But that requires the EU’s assent which

would be unlikely after a no-deal outcome.

The other countries mustalso agree. David

Henig a former trade negotiator says they

would impose harsh terms given Britain’s

weak position.

Customs would be a big problem. Brex-

iteers say Britain should keep its borders

open without controls or tariffs. Yet the EU

would be unable to reciprocate not least

because WTOrules say that tariff-free ac-

cess would have to be offered to all mem-

bers. The number of customs forms for ex-

porters would quadruple costing £20bn a

year. An extra two minutes’ delay for lor-

ries at Dover would mean long queues in

people in Brussels think it is. Another of its

purposes is to win more support at home

for Mrs May’s Chequers plan by showing

voters the horrors that would result from

rejecting it. So far this is not working ei-

ther. Polls find that voters prefer no deal to

Chequers by two to one.

That may be because they think a no-

deal separation would be amicable. Both

sides could agree to minimise disruption to

flights food supplies and so on. Yet a

friendly no deal is implausible. Whether it

happened by accident or design it would

now mean Britain rejecting previously

Brexit with no deal

Ready or not

A rising chorus again pitches the case for walking out of the European Union with

no deal. It is delusional

Britain

Also in this section

20 The economics of stockpiling

21 Lib Dem entryism

21 The right to die

22 Hidden slavery

23 Espionage and business

Losers and losers

Source: IMF

Five-year effect on GDP of a no-deal Brexit

compared with no Brexit %

43210 –

Britain

Ireland

Netherlands

Denmark

Belgium

Sweden

Germany

Poland

France

Spain

Italy

Bagehot is away