Britain’s economy could be 9% weaker under no deal Brexit
The country could also face a shortage in some food produce, as 30% of food comes from the EU and that would lead to a spike in food prices.
A ‘no deal’ Brexit could cause the British economy to shrink by 6% to 9% over the next 15 years, a government report revealed on Tuesday. Dire consequences could result if Britain pulls out of the European Union (EU) without a deal, the report revealed, including businesses in Northern Ireland going bust and a rise in food prices.
The official document released by the British government was published only after constant demands from lawmakers were made to prepare for a ‘no deal’ Brexit scenario as the March deadline draws near.
On Tuesday, United Kingdom’s (UK) prime minister Theresa May was forced to promise the Parliament on votes to allow members of parliament (MPs) the option to reject a ‘no deal’ Brexit and the choice to delay Brexit. This is after the prime minister said she needed more time to amend the Brexit deal.
Mrs May set out a tight schedule laying out the dates to keep Parliament on track before the slated Brexit date of March 29th. Lawmakers will take a vote on Mrs May’s Brexit deal by March 12th, if the vote fails, Parliament will have to take a vote to support a ‘no deal’ Brexit on March 13th.
If lawmakers reject Mrs May’s Brexit deal and do not support a ‘no deal’ Brexit, Parliament will vote on March 14th to extend Article 50.
The extension of Brexit deadline is not expected to be a protracted delay, as Mrs May said she prefers it to be ‘the shortest possible’.
Food shortage, costly customs checks, expensive tariffs
In the government report, it stated that with a ‘no deal’ situation, the flow of goods through the coastal town Dover in England would be significantly reduced for months. The country could also face a shortage in some food produce, as 30% of food comes from the EU and that would lead to a spike in food prices.
Customs checks could also cost firms £13 billion a year while there is no quantifiable method to measure the impact of the new tariffs, the report said.
The EU would treat the UK as a separate country and tariffs on beef exports could be at 70%, while tariffs on lamb would be at 45%, and car tariffs at 10%. The amount of paperwork businesses need to manage when passing through customs may be confusing if the incorrect paperwork are used, and that would cause further confusion and congestion to the flow of traffic of goods.
Currently, international trade agreements are also barely progressing, with only six out of the 40 planned agreements signed.
Some parts of UK would be more affected than others
The impact of a ‘no deal’ situation is expected to be worse for Northern Ireland than in Great Britain, the report said.
The impact on the economy in different parts of the UK would vary, with the Northeast of England shrinking 10.5%, Northern Ireland smaller by 9%, and Wales and Scotland economies down by 8%.
The report however, stated that the Treasury has stashed about more than £4 billion for a ‘no deal’ scenario. Preparations for the financial year of 2019 to 2020 received an allocation of £2 billion of that sum in December.
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