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What does a no-deal Brexit mean?

  • 28/09/2018
  • Jane Bray

Prime Minister Theresa May has warned that we "must prepare" for a no-deal Brexit, with political difference between EU leaders at an all time high.

With less than 200 days until the UK leaves the EU, concerns are growing that the country will leave the bloc without a deal in place. Earlier this week Mrs May said the two parties remain a "long way apart" on two major Brexit issues, and negotiations have reached an "impasse".

What is a 'no-deal' Brexit, and how would it affect Britain?

The UK is set to leave the EU on March 29, 2019 but there are fears the country could exit the block without having secured a formal withdrawal agreement.

The government only has until the end of March 2019 to secure a deal, but after the Prime Minister's Chequers plan was refused by European leaders, this is looking increasingly unlikely. If the country leaves under a no deal scenario, it could have an impact on a whole range of issues for Britain, and both the EU and the UK have issued guidance on what could happen if a formal withdrawal deal is not in place.

What will happen in the event of a no-deal Brexit?

In reality, a no deal scenario would mean there would be no transition period for consumers, businesses and public bodies and they would have to respond immediately to the changes. This scenario would allow Britain to try and broker trade deals with other countries, but they take years to complete.

It would however mean that the country would not be legally obliged to pay the £39 billion divorce bill. Under the current deal, the UK can only implement trade deals with other countries after the transition period.

The transition period would allow Britain to make new trade deals with the EU but in a no deal situation, there would be no adjustment time to allow for changes in laws or negotiations for trading deals. 

EU nationals living in the UK and UK citizens living in the EU could see their residency rights disappear overnight and become subject to domestic immigration rules, which could be a big issue for many businesses with international staff. 

A no deal Brexit also threatens to put pressure the Good Friday agreement, as the EU would want Ireland to impose customs and other checks on its border with Northern Ireland which neither want to do.

Tariffs would be imposed on goods that the UK sends to the EU and the same for goods that the EU sends to the UK. Tariffs on agricultural products could be as high as 60 percent. Britain would also exit the single market for goods and agriculture which could result in red tape for businesses.

Customs checks at ports would affect the supply of food and goods and there are fears of long queues at borders and disruption to air travel.

UK Driving licences may not work abroad, there is no guarantee that there would be free data roaming in Europe and British passport holders could run into difficulty.

During these unsettled times all we can do is wait to see what happens over the next few months and hope that an agreement is reached. 

As far as dealing with international companies is concerned CoCredo have over 229 countries that we run reports in. Looking closely at your suppliers from abroad and monitoring them can help to protect your business from bad debt. 

 

Source:Standard.co.uk