A letter from chancellor Philip Hammond today confirmed that a no deal Brexit would result in a 5% – 10% hit to UK GDP with the largest negative impacts being felt in the North East and Northern Ireland.
His letter was in response to a request from the Treasury Select Committee of MPs requesting the Treasury provide the committee with its detailed impact assessment of a no deal Brexit.
In response to the letter, Treasury Committee chairwoman Nicky Morgan MP said: “The chancellor has confirmed that the government forecasts a disastrous hit to our economy and living standards in the event of a ‘no deal’ Brexit.
“The chancellor has not committed to producing an analysis of the short-term economic fallout of a ‘no deal’ Brexit.
“The committee will continue to press the Treasury for a robust and high-quality short- and long-term analyses of the economic consequences of Brexit so that Parliament can take properly informed decisions in the coming months,” she added.
The advice given to business is to prepare for changes in cross border trading and consider changing commercial terms to reflect changes in procedures and tariffs.
The government said it is proposing a new economic and regulatory arrangement with the EU to maintain the economic benefits of cross-border provision of the most important international financial services traded between the UK and EU countries.
If Britain leaves the EU without a deal, UK-based customers accessing services in the UK provided entirely by UK-based providers should not expect to see any changes as a result of the exit, the official papers said.
However, in many other sectors the UK government has agreed that it will adopt EU standards and regulations to enable continued trade.
Contingency plans needed
Stephen Jones, chief executive of UK Finance (pictured), said: “A ‘no deal’ scenario can and should be avoided.
“Both the UK and our EU partners should focus on agreeing a managed exit and a clear framework for cross-border trade including in financial services.
“However, it is right that contingency plans are made to minimise disruption for consumers and businesses on both sides of the Channel in the event of a ‘no deal’.”
Jones added that the government was taking a pragmatic approach to addressing critical cliff-edge issues and to ensure consumers and businesses could continue accessing vital cross-border services.
“However, these issues cannot be addressed by the UK acting alone,” he continued.
“It is therefore vital that negotiators on both sides work together to agree solutions that prevent any unnecessary disruption and additional costs for customers in both the EU and UK.”
Brexit minister Dominic Raab today said reaching a deal remains a top priority for the government.
In a speech he added: “We are stepping up the pace and the intensity of our negotiations, and I am confident a good deal is within our sights.”