Anti-Brexit demonstrator Steve Bray holds placards as EU's Chief Negotiator Michel Barnier walks with an entourage to a meeting in Westminster, London, Britain September 9, 2020.
London, United Kingdom - Economists warn of dire consequences if UK cannot agree with EU on future terms by mid-October deadline.
Published: Wed 9 Sep 2020, 8:26 PM
Updated: Wed 9 Sep 2020, 10:38 PM
The prospect of a no-deal Brexit looms again in Britain, stoking fears of a painful double whammy for an economy already on its knees due to the deadly coronavirus outbreak.
Concern is mounting as Britain and the European Union meet again in London this week, with hopes fading of an immediate breakthrough and an approaching mid-October deadline.
Britain left the European Union in January but remains bound by the bloc's rules while it thrashes out the terms of its future relationship.
Prime Minister Boris Johnson has insisted the country will prosper even if no deal is struck in time for it to be implemented from January 1 next year.
But economists are less confident, with the lockdown tipping the British economy into a record recession, and an uncertain outlook elsewhere.
Jonathan Portes, professor of economics and public policy at King's College London, said: "A no-deal Brexit would represent a further major shock to a UK economy and, to a lesser extent, to EU economies, still recovering from the largest economic shock in living memory.
"The result of no-deal could be delays at ports, reluctance to contract across borders, and difficulties in filling jobs" that were traditionally taken by EU nationals, he told AFP.
- Costly -
Thomas Sampson, professor at the London School of Economics (LSE), warned the overall long-term cost of a no-deal Brexit might match or exceed that of the coronavirus outbreak.
"Conventional wisdom holds that the impact of Covid-19 on the UK economy dwarfs the potential consequences of Brexit," he said.
"This has led some (anti-EU) Brexiteers to argue there is nothing to fear about a no-deal Brexit.
"Yet, data show that a no-deal Brexit may not be less costly than the long-term economic fallout from Covid-19."
In the event of no-deal, Britain would default to World Trade Organization rules, which could mean higher export tariffs and other barriers.
Compounding fears is the imminent end of the jobs retention scheme, under which the UK government has paid most private sector wages of millions furloughed due to the virus.
- Business pressure -
The CBI business lobby has warned that many virus-wracked companies might not be able to survive another body blow.
"Amid all the noise and negotiations, businesses in the UK and EU remain clear -- a good deal is essential," said deputy director-general Josh Hardie
"An agreement will be the foundation for post-Covid recovery across the continent. It will protect the jobs under pressure from the pandemic."
Some industrial giants who are dependent on complex supply chains for components have already warned about the future of their UK operations in the event of no-deal.
European aerospace giant Airbus and Japanese carmaker Nissan are among those to have warned repeatedly about painful investment cutbacks, plant closures and job losses.
In Britain's struggling retail sector, there are widespread fears that a no-deal Brexit will lead to higher prices for imported food staples like fish, fruit and vegetables.
Experts also argue that could have a knock-on impact on inequality, with poverty rampant and homelessness soaring due to austerity measures imposed since the 2008 financial crash.
- 'Global Britain' -
The UK's right-leaning Conservative government is meanwhile pursuing an ambitious "Global Britain" project to tie in with what it says is its return as an independent, sovereign nation.
It is chasing ambitious free-trade agreements with the likes of Australia, Canada, Japan and the United States.
Amid the gloomy predictions, KCL professor Portes remained upbeat.
"Despite Brexit, over the longer term, the UK will under almost any plausible scenario remain a large, prosperous open economy with a number of very successful and competitive sectors including not just finance but higher education, law, business services, etc.
"In that sense of course the 'Global Britain' model can 'work'. Brexit is not likely to be beneficial -- but equally it is not the end of the world."
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