The EconomistAugust 4th 2018 19
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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 EUâs 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 Britainâs 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 ofEUcitizensâ 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
EUâs 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 EUâs 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 Britainâs
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 minutesâ 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 Mayâs 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 â
Britain
Ireland
Netherlands
Denmark
Belgium
Sweden
Germany
Poland
France
Spain
Italy
Bagehot is away