Umunna: The Government’s own documents show a ‘no-deal’ Brexit would be a catastrophe

26 February 2019

On 14 February 2019, Anna Soubry and Chuka Umunna tabled an amendment to force the Government to publish Cabinet papers on the impact on business and trade of a “no deal” Brexit. In response the Government agreed to publish these papers ahead of the vote on the Prime Minister’s Brexit motion being debated and voted on in the House of Commons tomorrow (27 February). The Government has published the documents today.

Commenting on the release of the documents, The Independent Group MP Chuka Umunna, said:

"These documents - which The Independent Group of MPs have forced this Government to publish - paint a disastrous picture of the catastrophe which would befall our country if there is a no-deal Brexit. In light of what she knows, it is utterly irresponsible for the Prime Minister to keep a no-deal Brexit on the table given the extreme damage it will do. These papers set out how food prices will rise, we may see panic buying, there will be severe disruption at the border, and jobs and livelihoods would immediately be put at risk.

"Today she told the House of Commons she is listening but MPs have passed a motion rejecting a no-deal Brexit and yet she refuses to request an extension of the Article 50 process in order to stop no-deal happening. The Prime Minister is refusing to face down the hard-right extremists in her own party and put the national interest first. This is yet more evidence of our broken politics. We have no choice but to change it."

ENDS

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Notes to editors

  1. Chuka Umunna is the Member of Parliament for Streatham. In the EU Referendum, Chuka is a leading supporter of the People's Vote campaign. He also chairs the All-Party Parliamentary Group on Social Integration, which aims to find ways of bringing our different communities together.
  2. There are 31 calendar days, and 20 parliamentary sitting days, until the legislated day for Brexit on 29 March 2019.
  3. More information on The Independent Group is available at our website:
    https://www.theindependent.group/
  4. You can follow The Independent Group on Twitter: @TheIndGroup
  5. The full document is available here.
  6. Extracts from the Implications for Business and Trade of a No-Deal Exit on 29 March 2019:

‘Implications for Business and Trade of a No Deal Exit on 29 March 2019’

8. Notwithstanding very significant efforts to prepare for a ‘no deal’ scenario, the latest internal Government-wide delivery reporting reveals the scale of risk remaining in the limited time available. In February, Departments reported being on track for just under 85% of no deal projects but, within that, on track for just over two thirds of the most critical projects.

16. Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low …

17. Evidence suggests that individual citizens are also not preparing for the effects that they would feel in a no deal scenario. UK citizens travelling to or living in the EU would need to complete a number of administrative tasks to ensure that their interactions with the EU are as unaffected as possible. These range from renewing passports, to applying for a car insurance green card and International Driving Permit to drive in the EU. As of February 2019, despite a public information campaign encouraging the public to seek out the Government’s advice on preparing for a ‘no deal’, noticeable behaviour change has not been witnessed at any significant scale.

21. The Government has already published long term analysis of the impact of a no deal scenario that implicitly assumes a smooth, orderly transition to WTO rules. This estimates that the UK economy would be 6.3-9% smaller in the long term in a no deal scenario (after about 15 years) than it otherwise would have been when compared with today’s arrangements, assuming no action is taken … This analysis does not account for any short term disruptions, which would be likely to have additional short and long run economic impacts in an immediate no deal scenario.

24. … UK citizens would be treated as third country nationals by Member States, and potentially be subject to full Schengen checks. This would mean they would no longer be able to use e-gates, and checks to enter EU Member States could take longer than they currently do.

25. … Every consignment would require a customs declaration, and so around 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU.

28. … at the time of year we will be leaving the EU, the UK is particularly reliant on the Short Channel Crossings for fresh fruit and vegetables. In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario. As of February 2019, many businesses in the food supply industry are unprepared for a no deal scenario.

31. … For example, the EU would introduce tariffs of around 70% on beef and 45% lamb exports, and 10% on finished automotive vehicles. This would be compounded by the challenges of even modest reductions in flow at the border.

32. … The UK automotive industry is highly export intensive … The risk of no deal is of major concern for the industry, due to the high tariffs which would be applied on exports to the EU. This would be 10% on finished vehicles, and around 2.5-4% on components. Although wider macroeconomic effects will influence how the sector is affected, low operating margins may mean that in many cases extra costs could be likely to be passed on to consumers at the showroom.

34. Overall, the cumulative impact from a ‘no deal’ scenario is expected to be more severe in Northern Ireland than in Great Britain, and to last for longer. This is because of Northern Ireland’s unique circumstances, including in particular its geographical position as the only part of the UK with a land border with the EU, and the current lack of an Executive in Northern Ireland.

38. … The UK would risk a loss of market access and increase in non-tariff barriers. UK businesses would face barriers to establishment and service provisions in the EU which they had not previously faced, including nationality requirements, mobility, recognition of qualifications and regulatory barriers when setting up subsidiaries in EU member states.