‘No-deal’ scenario

What happens if Brexit talks fail?

AFP, LONDON: Higher food prices, grounded flights and City job losses: catastrophic predictions of Britain crashing out of the EU with no deal in place abound despite the more upbeat tone from Friday’s EU summit.

Prime Minister Theresa May has not ruled out walking away from the talks and some hardliners in her own party are urging her to do so to avoid paying a “divorce bill” and for a cleaner, simpler Brexit.

But many warn that leaving the EU with no agreement on future ties could damage the British economy.

So what could a worst case “no-deal” scenario look like?

FOOD

Britain and the EU would have to fall back to World Trade Organization rules to trade with each other, meaning a series of tariffs on imports and exports which are particularly high for farm products.

The British Retail Consortium has estimated that the price of cheese could rise by more than 30 percent.

A slice of Italian parmesan selling for £5 in a British supermarket would jump to £6.50.

The BRC estimated the average cost of food imported by retailers from the EU would increase by 22 percent.

Britain imports around 60 percent of its food from the EU, particularly fruit and vegetables.

FLIGHTS

With no deal in place, airlines based in Britain would no longer be allowed to fly to the European Union. Carriers such as British Airways would be required to obtain European authorisation individually to be able to fly, potentially affecting a flow of hundreds of thousands of passengers a day.

“It is theoretically conceivable in a no-deal scenario that there will be no air traffic moving between the UK and the EU on March 29, 2019,” Finance Minister Philip Hammond said earlier this month when asked about the prospect by a committee of MPs.

But he added: “I don’t think anybody seriously believes that is where we will get to.”

CARS

Imports and exports of cars would face 10 percent tariffs. That could hurt foreign carmakers with UK operations such as Nissan, whose plant in Brexit-voting Sunderland employs around 7,000 people and exports more than 80 percent of its vehicles.

Costs are likely to be passed on to consumers.

“Import tariffs alone could push up the list price of cars imported in the UK from the continent by an average of £1,500,” the Society for Motor Manufacturers and Traders said in a report.

FINANCE

Financial institutions would lose “passporting rights” that allow for cross-border services to clients across the bloc. Tens of thousands of jobs would be lost in the City finance hub as banks and insurers are forced to transfer EU-linked business to subsidiaries in the EU.

Many financial institutions have already started enacting contingency plans in case of a no-deal, with offices in Amsterdam, Dublin or Frankfurt opening up.

Oliver Wyman, a consultancy, estimates up to 75,000 jobs could be lost in Britain’s financial services industry.

CUSTOM QUEUES

Customs declarations required at British ports would rise from the current 55 million to 255 million a year if there is no separate deal.

The British Retail Consortium said this could mean delays at ports of “up to two or three days”.

In an interview with The Times last month, Hammond warned the port of Dover was “clearly not” equipped as “the volumes of trade at Dover could not be accommodated if goods had to be held for inspection”.

IRISH BORDER

Checkpoints would return to the 499 kilometre (310-mile) border between British-ruled Northern Ireland and the Republic of Ireland.

The checks would be hugely disruptive for the 30,000 people who cross it every day, often to work.

It could also revive

smuggling, once a lucrative income for militia groups and revive sectarian tensions that have been largely dormant since a 1998 peace deal put an end to three decades of conflict.

Irish Prime Minister Leo Varadkar said earlier that customs posts would be “a brutal physical manifestation of historic divisions and political failure... a place of bloodshed and violence.”

ELECTRICITY

Once Britain leaves the Euratom treaty, other countries would no longer be able to send nuclear materials or components for its power plants unless a separate arrangement is agreed.

Britain’s Nuclear Industries Association has warned of the “risk of significant disruption” as nuclear power accounts for around 20 per cent of the country’s electricity production.

Leaving Euratom without any other kind of deal in place would also stop the supply of radioactive isotopes used to diagnose and treat cancer patients, which are not produced in Britain.

No-deal scenario

What happens if Brexit talks fail?

AFP, LONDON: Higher food prices, grounded flights and City job losses: catastrophic predictions of Britain crashing out of the EU with no deal in place abound despite the more upbeat tone from Fridays EU summit. Prime Minister Theresa May has not ruled out walking away from the talks and some hardliners in her own party are urging her to do so to avoid paying a divorce bill and for a cleaner, simpler Brexit. But many warn that leaving the EU with no agreement on future ties could damage the British economy. So what could a worst case no-deal scenario look like? FOOD Britain and the EU would have to fall back to World Trade Organization rules to trade with each other, meaning a series of tariffs on imports and exports which are particularly high for farm products. The British Retail Consortium has estimated that the price of cheese could rise by more than 30 percent. A slice of Italian parmesan selling for 5 in a British supermarket would jump to 6.50. The BRC estimated the average cost of food imported by retailers from the EU would increase by 22 percent. Britain imports around 60 percent of its food from the EU, particularly fruit and vegetables. FLIGHTS With no deal in place, airlines based in Britain would no longer be allowed to fly to the European Union. Carriers such as British Airways would be required to obtain European authorisation individually to be able to fly, potentially affecting a flow of hundreds of thousands of passengers a day. It is theoretically conceivable in a no-deal scenario that there will be no air traffic moving between the UK and the EU on March 29, 2019, Finance Minister Philip Hammond said earlier this month when asked about the prospect by a committee of MPs. But he added: I dont think anybody seriously believes that is where we will get to. CARS Imports and exports of cars would face 10 percent tariffs. That could hurt foreign carmakers with UK operations such as Nissan, whose plant in Brexit-voting Sunderland employs around 7,000 people and exports more than 80 percent of its vehicles. Costs are likely to be passed on to consumers. Import tariffs alone could push up the list price of cars imported in the UK from the continent by an average of 1,500, the Society for Motor Manufacturers and Traders said in a report. FINANCE Financial institutions would lose passporting rights that allow for cross-border services to clients across the bloc. Tens of thousands of jobs would be lost in the City finance hub as banks and insurers are forced to transfer EU-linked business to subsidiaries in the EU. Many financial institutions have already started enacting contingency plans in case of a no-deal, with offices in Amsterdam, Dublin or Frankfurt opening up. Oliver Wyman, a consultancy, estimates up to 75,000 jobs could be lost in Britains financial services industry. CUSTOM QUEUES Customs declarations required at British ports would rise from the current 55 million to 255 million a year if there is no separate deal. The British Retail Consortium said this could mean delays at ports of up to two or three days. In an interview with The Times last month, Hammond warned the port of Dover was clearly not equipped as the volumes of trade at Dover could not be accommodated if goods had to be held for inspection. IRISH BORDER Checkpoints would return to the 499 kilometre (310-mile) border between British-ruled Northern Ireland and the Republic of Ireland. The checks would be hugely disruptive for the 30,000 people who cross it every day, often to work. It could also revive smuggling, once a lucrative income for militia groups and revive sectarian tensions that have been largely dormant since a 1998 peace deal put an end to three decades of conflict. Irish Prime Minister Leo Varadkar said earlier that customs posts would be a brutal physical manifestation of historic divisions and political failure... a place of bloodshed and violence. ELECTRICITY Once Britain leaves the Euratom treaty, other countries would no longer be able to send nuclear materials or components for its power plants unless a separate arrangement is agreed. Britains Nuclear Industries Association has warned of the risk of significant disruption as nuclear power accounts for around 20 per cent of the countrys electricity production. Leaving Euratom without any other kind of deal in place would also stop the supply of radioactive isotopes used to diagnose and treat cancer patients, which are not produced in Britain.