If the EU Commission moved to support these deals – and in reality it will have little choice – the City will have what Bank of England Governor Mark Carney, has termed a “glass half-full” no deal situation. “It’s cold comfort, but it will be worse in Europe than it is here,” he told MPs.
Still, even allowing stimulus measures such as cutting interest rates, house prices could take a significant hit. Economists believe no deal could shave at least two per cent off GDP by the end of 2020.
It might not be a full-blown catastrophe, says Andrew Goodwin of Oxford Economics, but, no deal would still cause massive economic disruption and shake confidence.
“Markets have only priced in 20-30 per cent chance of no deal. Obviously if no deal actually happened I wouldn’t be surprised if we saw a 10 per cent drop in the value of sterling,” he says.
Trade & Customs
Without any formal trade deal, the UK would have to rely on WTO rules – in a model described by Brexiteers as an “Australia-style” relationship.
However, the current default EU Commission position is “all relevant” EU legislation will apply to imports and exports, including tariffs, VAT and a total ban on food of animal origin until the UK registers as a ‘third country’. The result would be a virtual blockade.