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What price: No deal Brexit?

In the early stages of the Brexit negotiations Theresa May said, “No deal is better than a bad deal”, but subsequently she has negotiated to avoid a ‘no deal’ outcome.

However, her Chequers plan for a soft Brexit has been rejected by EU leaders and were she to compromise further the right wing of her party would almost certainly defeat that. Hitherto, planning for a ‘no deal’ looked like a way of pressing the EU to meet her half way but unless they do that in the next six weeks it could be the only deal we get. So, what might it mean for the nation and for the EU as well?

From a neutral perspective if there was no deal by March 2019, negotiations could continue after the UK had left the EU. Michel Barnier has that would not be the case but it would surely be in both sides’ interests to agree security and anti-terrorist measures and possibly law enforcement too. The UK is not the great imperial power it was but it still has the fifth largest economy in the world, is a nuclear power and a permanent member of the UN Security Council. Given the shared threats of Russian aggression, terrorism, tides of migrants from the poorer nations of Africa and the Middle East, and climate change, it would be incredibly foolish not to find ways of working together.

That has implications for the so-called divorce settlement. This includes a substantial payment to the EU to cover the costs of decisions we were party to as a member. Hard line Brexiteers say we should not pay anything if we leave without a deal. They fail to recognise that this would make future collaboration with the EU more difficult. We may want important decisions to be made here, not in Brussels, but it would be madness to think we can isolate ourselves from our neighbours.

The possibility of a no-deal Brexit has already caused the value of the pound to fall and that would presumably continue, increasing the costs of imports but also reducing the prices of our exports. However, our exports to the EU would cost more with the imposition of tariffs. Car manufacturers are especially worried about this because parts for their vehicles are imported from the EU, installed in their products and then exported back to the EU market with tariffs added at each stage.

Those who argue that lost sales in Europe will be replaced by sales in the rest of the world fail to recognise that we have first to join the World Trade Organisation and then compete with China, India, and USA in those markets. Labour costs in China and India are much lower than ours and President Trump’s tariffs will make selected products more expensive. It is for reasons like these that the Chancellor of the Exchequer, the Governor of the Bank of England and the CBI are all warning of the damage a ‘no-deal’ Brexit could do to the UK economy. It is nonsense to dismiss their concerns as a ‘fear factor’. It is just basic economics.

Allied to the trade issue are the implications for the operation of Customs. The port of Dover currently processes up to 10,000 incoming and outgoing vehicles each day. 90% of those come from the EU and are currently processed in approximately two minutes.  Customs checks on non-EU vehicles take approximately 20 minutes. Post Brexit there will be long queues of vehicles waiting to be checked and the port lacks the physical space to accommodate them. Thousands of additional Customs officials will be required and long queues on the A20/M20 are likely to become a daily problem.

There are too many other consequences of leaving the EU to adequately address here now but what stands out is the need to put aside the rhetoric of the Brexit debate and realistically face up to the consequences of what we have voted to do. It is time to repent of the gracelessness that has soiled British politics since June 2016 and pray for national reconciliation and political realism.