Britain’s top civil servant, has given ministers a detailed warning of the consequences of a no-deal Brexit, saying it would lead to 10 per cent price hikes in food and direct rule in Northern Ireland.
In a letter sent to the cabinet ahead of its meeting on Tuesday, cabinet secretary Mark Sedwill warned that if the UK crashed out of the EU on April 12, the country would be hit by a recession and sterling’s depreciation would be “more harmful” than it was in the 2008 financial crash.
In his 14-page document, Sir Mark warned that companies heavily involved in trading with the EU could “struggle to get credit” and that “there would be enormous pressure on the government to bail out companies on the brink”.
Sir Mark said a no-deal Brexit would hamper the ability of police and security services to keep Britain safe. It would lead to the reimposition of direct rule by London over Northern Ireland and “the stability of the union would be dislocated”, he wrote.
The Cabinet Office refused to comment on the letter. But other civil servants said Sir Mark’s decision to write the document, leaked to the Daily Mail, was probably deliberately timed.
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At least 10 cabinet ministers are now said to regard a no-deal Brexit in 10 days as an acceptable outcome. According to some officials, Sir Mark will therefore have wanted those ministers to be fully informed of the civil service’s view of the consequences.
“There’s a group of ministers who simply believe in no-deal and dismiss the risks but without ever getting any real factual challenge to their views,” said one Whitehall figure. “What Sedwill will have wanted to do at this key moment is provide them with plenty of reality.”
Other officials said Sir Mark will have wanted to put on record the fact that he made clear to ministers what the risk of no deal could be.
“Many officials fear that Brexit could one day be the subject of a major public inquiry,” said one civil servant, “and Sedwill will want his formal advice on no deal to get into the official records.”
Jill Rutter, of the Institute for Government, said it was highly unusual for a cabinet secretary to write directly to ministers in this way and it was unlikely that Sir Mark would have done so without first receiving the green light from Theresa May, the prime minister.
“If so, that would suggest the prime minister agrees with the warnings contained in the letter,” Ms Rutter said.
Many economists say there is no consensus on how leaving the EU without an agreement would affect the economy, or even on what no deal really means in practice.
“My understanding from talking to those close to some of the planning is that it’s not that the UK couldn’t cope with no deal,” said one Whitehall insider. “The UK could cope but mitigating the impact will take time and have a cost. Also, if we crash out without the timescale to prepare, it will have an immediate impact.”
