‘No-deal’ Boris moves another step closer to Number 10
A widely reported domestic altercation with his girlfriend failed to dislodge Boris Johnson from his position as firm favorite to be the UK’s next prime minister as the final phase of the UK Tory party leadership election began on Friday. Center stage in the contest between Johnson and Foreign Secretary Jeremy Hunt is likely to be the growing possibility of a “no-deal Brexit.”
With a thick Brexit fog hanging over the nation, there is only one certainty; the default position legally is that the UK will leave the EU on Oct. 31, whether an exit deal is agreed or not.
Throughout much of the period since the 2016 referendum, the prospects of the UK crashing out of the EU without a deal were widely dismissed, not least by Theresa May’s government itself. However, it has become a very real prospect, with Johnson asserting that the nation must leave on Oct. 31 come what may.
The concept of “no deal” is only patchily understood by much of the UK public, let alone international audiences. It would not mean only that the UK would abolish the rules that regulate its relationship with Europe. Many economic ties with the rest of the world would be undermined too, because they are underpinned by trade treaties that the EU has agreed with key nations from Canada to Japan. With Oct. 31 approaching fast, only about a quarter of 40 planned post-Brexit trade agreements have been signed.
Another common misconception is that there is only one no-deal outcome, when in fact there are several. At the extreme end of the spectrum is a chaotic no-deal Brexit whereby negotiations between Brussels and London break down acrimoniously.
Despite the economic harm it would cause the UK and the EU, a version of this chaotic option cannot be dismissed; Johnson’s dogmatic Brexit position is popular with the 160,000 Tory party members who will elect their leader. The underdog, Hunt, who voted Remain in the 2016 referendum, advocates a more nuanced approach, with the option of a further delay in leaving if a revised withdrawal deal appears possible at the end of October.
The May government has proposed a range of measures to cushion the blow of no deal. They include unilateral UK action to maintain as much continuity as possible, such as allowing European road hauliers to use their licenses in the UK after Oct. 31, and maintaining agreements in critical areas such as aviation and civil nuclear cooperation and safeguarding.
Despite the economic harm (a no-deal Brexit) would cause the UK and the EU, a version of this chaotic option cannot be dismissed; Johnson’s dogmatic Brexit position is popular with the 160,000 Tory party members who will elect their leader.
However, in the event of a no-deal exit, it is unclear what measures might come from the EU side to ease the impact. Given the time and political capital expended by both sides in trying to reach a withdrawal agreement, a no-deal outcome would generate significant acrimony and finger pointing over who is to blame.
Despite Johnson’s apparent dismissal of the impact of a no-deal Brexit on the UK economy, there is a consensus among economists that this is wishful thinking. Longer-term forecasts aside, it is the short-term challenge that could be particularly intense; the Bank of England has asserted that the UK could tip into recession.
Part of the reason the short-term impact could be so severe is that, while it will ultimately be viable for the UK to trade as a third country with the EU and rest of the world under WTO rules and other international agreements, this cannot happen straight away; negotiating those new trade schedules will be neither automatic nor straightforward. In addition, many economists think that trading on WTO terms would have a negative effect compared with the status quo, at least to begin with.
This is why so many Members of Parliament are still trying to prevent a no-deal option through parliamentary means, aided by the activist House of Commons Speaker John Bercow. This month, for instance, there was a cross-party proposal for the Commons to take control of the chamber’s business from the government, but the vote was defeated by 309-298.
On previous occasions there has been a majority in the Commons against no-deal. The problem facing those many MPs who want to avoid this outcome is that they also need to cultivate stronger support for an alternative option to command the confidence of the chamber — including a second referendum, or perhaps a revised version of May’s withdrawal deal. Success in this challenge has so far proved elusive, and will now be a defining political task in what is likely to be a frenzied few months.
- Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics