Leaving the EU with no deal in place with the bloc could put the UK in the worst trade position among the world’s richest countries, a cross-party group of MPs has warned.
Research commissioned by the Labour MP Pat McFadden – a supporter of Open Britain, which campaigns for the UK to maintain ties with the EU post-Brexit – warned against Prime Minister Theresa May’s suggestion that “no deal for Britain is better than a bad deal for Britain.”
As May prepares to trigger Article 50, which could happen as early as Tuesday if the so-called Brexit bill is approved in the House of Commons, MPs cautioned that the UK must guarantee itself trade deals in the aftermath of quitting the EU or risk trailing behind other major industrialized countries.
The report found that although not all members of the G20 group have a formal free trade agreement (FTA), they at least have arrangements over certain industries, so-called equivalent agreements, mainly aimed at encouraging the financial service sector in Europe.
The EU will not trade with any G20 country unless there is some form of preferential treatment in place. The cross-party group of MPs therefore warned that leaving the EU without a trade agreement would be “choosing the most extreme position of all major trading nations.”
May has previously said the UK could leave without a deal by resorting to the World Trade Organization’s (WTO) tariffs, while she also repeated Chancellor Philip Hammond’s statement that the UK could become a low-tax rival if no deal is negotiated in the two-year process of the UK exiting the bloc, adding that the government would be “free to change the basis of Britain’s economic model.”
The warning comes as a Treasury document leaked to the Independent reveals that relying on WTO tariffs would cause a “major shock” to the UK economy.
However, speaking on ITV’s Peston on Sunday program, Foreign Secretary Boris Johnson seemed confident Britain would stay strong regardless of whether it got a deal or not, saying it “would be perfectly OK” if it left without one.
“I don’t think that the consequences of no deal are by any means as apocalyptic as some people like to pretend, and actually what we have seen in the budget from Philip Hammond last week are preparations for Britain over the next few years.”
McFadden said though that May’s suggestion of leaving the bloc with no trade arrangement in place “betrays a dangerous complacency.”
“The government is flirting, as a negotiating tactic, with an option that poses huge dangers to UK industry, services and agriculture,” he was cited as saying by the Guardian.
“This is why it is vital for Parliament to have a meaningful say in the negotiations to come, and to have a say on both a free trade agreement and what should happen in the event of no deal being agreed.”
Article 50 – the mechanism allowing the prime minister to kick-start the official process for the UK to leave the EU – could be triggered as soon as Tuesday if MPs manage to scrap amendments made by the House of Lords last week.
The House of Lords called for two amendments to the bill: assuring EU citizens in the UK have their rights to stay guaranteed, and giving a "meaningful vote” to Parliament once final negotiations are drawn up.