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Risks of No-deal Brexit
303 to 258. Again, the parliament failed to support the latest withdrawal agreement.
Over the past two years, Prime Minister Teresa May has been negotiating Brexit deal with EU, but many crucial questions still remain unsolved. The UK is scheduled to leave the EU at 11pm (GMT) on 29 March 2019. Without a formal withdrawal treaty by that time, all EU rules would cease to apply to the UK instantly, resulting in great uncertainty of the management of trade, Irish border issue, and citizens’ rights. Although the UK government strives to avoid a no-deal Brexit, given the divisive attitudes MPs hold for May’s draft Brexit deal, the possibility of a no-deal Brexit does exist.
Trade & Business
A recent poll of members of Institute of Directors showed that nearly 30% plan to or have moved some of their businesses out of the UK to avoid the potential negative influences of a no-deal Brexit. This poll result demonstrates businesses’ lack of confidence of British market after no-deal Brexit. Indeed, trades with Britain would be risky if Britain crushes out of the EU in the absence of any formal deal.
After a no-deal Brexit, Britain would be subject to the regulations of WTO, which means that the UK exports would be taxed equally as those from non-EU members and meanwhile face more rigorous custom checks. This would pose difficulties for British manufacturers to export goods to the EU, and some companies may just move out of the UK to avoid the potential complications of border check. A possible consequence would be the increasing unemployment rate across the UK as companies move out.
In addition, the overnight end of zero-tariff trade would lead to rising prices of goods imported from the EU both in a short-term or a long run. British government should thoroughly consider the consequences of this since the UK heavily relies on goods from the EU. In a short term, it is no doubt that a no-deal Brexit could render citizens in panic. Research by the UK’s own Brexit department indicates that some parts of Britain may even experience food shortages within a fortnight of no-deal Brexit.
It is also important to note that a no-deal Brexit means that the transition period from March 2019 to December 2020, which intends to give businesses extra time to adapt to the market changes caused by Brexit, would not exist. The lack of transition time would be another risk and concern for the businesses.
The Irish Border
In 1999, one year after the sign of Good Friday Agreement, the Republic of Ireland removed its terrestrial claim of the whole island, breaking down the barriers of movement and trade on the island. This signified a new stage of the UK-Ireland relationship. However, a no-deal Brixit could bring back all controversies two decades ago.
The problem is whether Northern Ireland should remain part of the European single market. Since the British government believes its sovereignty would be interfered if Northern Ireland remains in the EU market, a hard border between Ireland and Northern Ireland is highly possible. In this case, the EU would impose rigid custom checks (like those on Sweden-Norway border) and regulatory checks on the Irish border.
It is not likely that the EU would compromise and not check at the Irish border as Britain wishes, since the EU checks at Calais or Dunkirk and there is not a valid reason to make an exception for the UK. Would there be a transition period without the new check on products after a no-deal Brexit? Maybe not. For the EU, a temporary period without border check is too risky. For instance, if a large amount of prohibited goods flood into the EU countries in this period, the future pressure on Irish border check would be even greater, leading to more conflicts between the UK and the EU.
What is worse, the poll shows that many Northern Irish people would prefer having a “soft border” or even remaining in the EU single market. This poses the risk of Irish unification because Irish people would tend to question the benefits of staying as part of the UK. Besides, throughout the history, Irish had never been friendly to the Brits due to religious disputes, Cromwell’s conquer, great famines, etc.
People (Tourists & Citizens)
Tourism across the UK border is worth billions of dollars, but a no-deal Brexit could seriously disrupt tourism. Many aspects like passport control, currency, and mobile roaming would be affected. For example, under no-deal Brexit, EU countries would treat British tourists as those from a “third country” rather than those enjoying the right of movement freedom within the EU, so British tourists would have to take a 90 seconds border check. The time of waiting in line would also increase. Thus, British tourists may be less passionate about travelling to EU countries, leading to the decline of tourism between the UK and the EU.
Aside from affecting tourists, a no-deal Brexit brings even more uncertainties to citizens, both EU citizens in the UK and UK citizens in the EU. The UK withdrawal agreement protects some rights of EU citizens and British in the EU, but with a no-deal Brexit, these people might even become illegal immigrants.
Prime Minister Theresa May had called EU workers to stay in the UK for many times because these workers constitute a significant labor force for Britain. Even so, if no-deal Brexit takes place, these workers may not be recognized British citizens (but their status as permanent resident is likely to be maintained). However, the deprivation of the citizen status could prompt some workers to leave, which the British government needs to take into consideration when making decisions about no-deal Brexit.