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Publication Of Report: The Consequences Of “No Deal” For UK Business, House Of Commons Committee On Exiting The European Union

Publication of report: The consequences of “no deal” for UK business
House of Commons Committee on Exiting the European Union, 19 July 2019

In its latest report, The consequences of ‘no deal’ for UK business, the Committee on Exiting the EU warns that a ‘no deal’ Brexit would lead to severe disruption, pose a fundamental risk to the competitiveness of key sectors of the UK’s economy and put many jobs and livelihoods at risk. It would represent a sudden rupture for the closely entwined economies of the UK and the EU 27.

The Government’s own economic assessment shows that a ‘no deal’ exit from the EU would be the most economically damaging outcome for the UK. The effect would be most severe in the North East and the West Midlands, and the chemical, retail, food and drink and manufacturing sectors would be hardest hit.

The Committee finds that without a deal the UK could not rely on Article XXIV of the GATT to maintain current tariff-free trade arrangements with the EU. If the UK were to leave the EU without a deal, the European Commission has said the UK will become a third country without any transitional arrangements.

The Committee also concludes that a non-cooperative ‘no deal’ cannot be the desired end state for UK-EU economic relations.

The Committee’s latest report examines the implications of leaving the EU without an Article 50 Withdrawal Agreement – a ‘no deal’ exit – on different sectors of the UK’s economy: services, automotive and manufacturing, food and farming, chemicals and pharmaceuticals and research and higher education.

The Committee Chair, Hilary Benn MP, commented:

We heard from representatives of important sectors of the UK economy which are all great British success stories. Every single one warned us of the damaging consequences faced by their members in the event of a no-deal Brexit. 

“The UK’s position as the front-runner destination for venture capital investment in technology firms would be jeopardised. The UK’s car industry would be put at a competitive disadvantage because it would face tariffs on its exports to the EU and interruptions to its highly-integrated supply chains. ‘No deal’ would lead to problems with some food supplies and, we were told, would be ‘disastrous’ for UK farming. The sudden introduction of tariffs on the pharmaceuticals and chemicals industries would seriously challenge the viability of their supply chains. The UK’s higher education sector – a world leader in science and research – would experience a short-term shock and longer-term reputational damage from which it would struggle to recover. And UK services businesses would risk loss of market access and face uncertainty about how no deal would affect their staff working in the EU because they would be treated as third country providers by the EU.

“And yesterday’s latest forecast from the independent Office for Budget Responsibility that a no-deal Brexit could cause a £30bn hit to the public finances, with an economy pushed into recession and asset prices and the pound falling sharply, will only add to the deep concerns of UK businesses.

“A no deal Brexit, with no GATT XXIV agreement, would be at best a foolhardy gamble and at worst, lead to severe disruption, and it is neither desirable nor sustainable as an end state for our economic relations with the EU.

“This clear evidence reinforces our previous conclusion that a ‘managed no deal’ cannot constitute the policy of any responsible Government.”

The Committee will report further on the implications of a no deal exit for citizens’ rights in the Autumn.

Further information:

Each chapter relates to a specific sector with individual conclusions.

Chapter 1: Services
Par 38: Cross border trade in services
Par 39: Future arrangements on mutual recognition of professional qualifications
Par 40: The flow of personal data
Par 41: EU regulatory regime for services
Par 43: Workers in the UK services sector
Par 44: Preparation of business for no deal
Par 45: Sources of EU funding
Par 46: Financial support for Small and Medium Sized Enterprises
Par 47: Venture capital investment in technology firms

Chapter 2: Automotive sector
Par 64: EU’s Common External Tariff in relation to the UK automotive sector
Par 65: UK-manufactured cars
Par 66: Trade with Turkey
Par 67: Integrated supply chains

Chapter 3: Food and farming
Par 81: Government’s provisional no deal tariff schedules
Par 82: Delays in agri-food supply chains due to customs and sanitary/phyto-sanitary checks
Par 83: European Food Safety Authority and Rapid Alert System for Food and Feed

Chapter 4: Pharmaceuticals and chemicals
Par 117: Just in time supply chains
Par 118: EU regulatory systems and databases
Par 119: Exchange of data and patient safety

Chapter 5: Research and higher education
Par 135: Horizon 2020 underwrite and Settled Status Scheme
Par 136: Decline in applicants to research and technician roles and for UK based grants

The full report can be accessed here:
https://publications.parliament.uk/pa/cm201719/cmselect/cmexeu/2560/256002.htm.

Publication Of Report: The Consequences Of “No Deal” For UK Business, House Of Commons Committee On Exiting The European Union

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