Britain crashes out of the EU without a deal

By the time we reach a hard Brexit we would already have likely experienced a number of political upheavals, as parties were shaken up and the pressure for another election increased.

You’d have inflation. Prices in shops could easily go up by 5% because of tariffs on food imports. This doesn’t seem like much, but it is quite a lot if your income is only going up by 1.8% and for people who are on very low incomes and haven’t got any spare money anyway.

This would lead to real acrimony between the EU and Britain, and probably the fall of the UK government. This in turn, might lead to a strange period of isolation for Britain in the West. The Brits have always been ambivalent about the EU. If they crash out, generating all sorts of weird costs for everyone, they will be persona non grata for a while. But all the relevant players are democracies, so there will be no violence or repression.

A crash out of the EU would have a distinct impact first on confidence – business, investor, consumer – which would act as a self-fulfilling outcome for economic pain. Loss of the trade and financial benefits of the single market would have large ramifications for years down the line.

If there is no deal, we would likely see more inflation and an economic shock, but it may not unfold overnight. I can’t really imagine planes stopping flying or suddenly lorries waiting hours to cross the channel – but overall growth, already the slowest in the Organisation for Economic Co-operation and Development post-2017, would take a further hit and it is possible growth would go negative. Whether any of this leads to a change in sentiment about Brexit is not clear, but there will be less disposable income and likely rising anxiety about the future, and Remain voters will feel even more agitated and pessimistic. In farming, we might get machines picking crops instead of people. If Brits aren’t willing to do it for £7.50 an hour, and you decide that you can still sell your product, then you may invest in machines to make burgers, serve coffee or pick vegetables. But it’s usually cheaper to employ people.

Sterling would drop sharply. However, this would not be a surprise turn of events. It would become clear with each day that passes without a sound negotiation, that calamity will come closer and closer. There is a deadline well before the final date agreed by the UK and EU, whereby the latter feels they have enough time to consider the British proposals thoroughly and bring it to a vote. Furthermore, the loss of access to the single market – and with no comparable, alternative deal in place – will mean a significant diversion of capital from and through Europe into the UK. That translates to far less global bid for the pound. More likely than not, we would have a robust sterling bear trend develop for months before the Brexit Day.

What’s interesting, when asking people ‘what should be top of your list of priorities when negotiating with Europeans?', is they continually say immigration. Even though the majority of immigration comes from outside of the EU, it’s still the top of their list of priorities. People are unlikely to change their mind.

This would lead to the dislocation of EU nationals living in Britain. Their rights are guaranteed by the EU. Suddenly they would be in some weird limbo the world has never really seen before. Some of them might lose property. Families might be divided.