Open Europe’s new report, ‘Manageable but material: the consequences of No Deal and how the Government should respond’ sets out nine things the Government needs to do to minimise the impact of no deal on the UK economy, including offering greater certainty for EU nationals and their employers, and taking steps to alleviate pressure on UK ports. Meanwhile the analysis, published today, warned Taoiseach Leo Varadkar the impact of no deal will be significantly worse for Ireland than they will be for the UK.
Open Europe’s Policy Analyst, Dominic Walsh, said: “The EU seems unlikely to accept the UK’s latest compromise offer for a deal.
“And despite recent attempts in Parliament to ‘rule out’ no deal, it remains the default outcome unless a deal is ratified or Article 50 is revoked.
“Even if the Government is forced to seek a further extension, this would not take no deal off the table.
“No deal is not a self-determining event; what the UK does next is just as important.”
The report also suggests the impact of no deal on the UK economy will be “uneven”, suggested: “Sectors which face high tariffs, are heavily regulated, or are particularly reliant on trade with the EU, are likely to experience more disruption than those which do not.
“Goods, particularly agriculture, are generally more exposed than services – the UK’s trade in the latter is much less EU-orientated.
“Moreover, the difference between a deal and No Deal is far greater for goods than for services.
“UK exporters are likely to experience more disruption than UK importers, due to asymmetry in the tariffs, checks and controls the UK and EU are set to introduce.”
Open Europe’s analysis also contains a color-coded table outlining 20 key areas affected by no deal which will make grim reading for Mr Varadkar, predicting severe short-term disruption, with little mitigation possible without EU co-operation, on the Irish side of the border.
Open Europe’s nine-point plan
1) Provide greater certainty for EU nationals and their employers. The Government should achieve this by continuing to push for a bilateral deal with the EU on citizens’ rights and addressing administrative issues with the EU settlement scheme. The Government should also pursue a liberal, pro-business immigration policy in the medium-term, and either reduce the salary threshold for skilled migrants or replace it with a needs-based assessment.
2) Alleviate pressure on UK ports and the Dover-Calais route, by ensuring both import and export processes are as smooth as possible. In particular, non-compliant exporters must be kept away from vulnerable ports – for example, by pre-clearing trucks at regional centres.
3) Effectively communicate no deal issues, so businesses and individuals are clear on what actions they need to take and what actions the Government has already taken.
4) Provide businesses with greater clarity over the UK’s long-term tariff regime. The current temporary regime offers little certainty beyond an initial twelve months.
5) Avoid imposing any checks or controls at the Irish border. Such a unilateral commitment is insufficient to ensure an open border, but is the only politically appropriate action the Government can take in the short-term.
6) Provide short-term support for sectors and regions hit by new trade barriers. The UK cannot prevent the EU from imposing third country tariffs and checks on UK exports, so mitigation efforts here will have to focus on compensation.
7) Provide continuity for product regulation but put wider economic competitiveness measures back on the table. Unilateral maintenance and recognition of EU product standards will provide importers with short-term regulatory stability. However, the Government should consider wider reforms to boost competitiveness.
8) Continue to pursue continuity agreements for EU free trade agreements (FTAs), but temper expectations of a quick trade deal with the US. The UK should only sign major deals when it has a clearer idea of its trade policy objectives, and be realistic about the practical and political obstacles to a US FTA.
9) Pull available economic levers to offset any disruption, in both the short-term and the medium-term. There are a variety of actions, such as reducing income tax or corporation tax, which the Government can pursue to support the economy, maintain business and consumer confidence, and ensure the UK is seen as open to business.
