No Deal Brexit Must Be Ruled Out

In less than a month's time the UK could be committing itself to leaving the EU on December 31st with no deal, no extension and no contingency plan. While the country, and indeed the globe, is distracted by the immediate need to tackle coronavirus, the UK government is sleep-walking towards a disastrous cliff edge that could compound the damage to the UK’s economy that the months of lockdown have already inflicted.

No one could have foreseen that the COIVD-19 pandemic would take place when the withdrawal agreement was drawn up. But given that is exactly what happened, the government cannot pretend to be dealing with business as usual.

Goldman Sachs has estimated that Britain’s economy has already lost 2.5% of GDP since the referendum. According to the Government’s own calculations, Brexit will cost 6.7% of GDP, or £130 billion, over the next 15 years. A no deal Brexit would wreak even more damage to our economy, jobs, business and industry and would create the double whammy of the economic cost to the UK of a no-deal Brexit and COVID-19 combined.

The risks of no deal are very real. Earlier this week, Ashwani Gupta, the global chief operating officer of Britain’s largest car factory, Nissan’s Sunderland plant, announced it may have no future if the UK leaves the European Union without a trade detail in place. The Japanese plant, which made 350,000 cars last year, employs 7000 workers. Gupta told the BBC “You know we are the number one car maker in the UK and we want to continue. We are committed. Having said that, if we aren't getting the current tariffs, it’s not our intention, but the business will not be sustainable. That’s what everybody has to understand”. 

Of Sunderland’s total output, 70% is exported to the EU. If the UK doesn’t secure a trade deal and defaults to World Trade Organisation rules, those exports would most likely be subject to a 10% tariff. This week, the Social Market Foundation calculated that the regions that will suffer most from the double shock of a no deal plus the pandemic will be the North-West and the Midlands, as well as sectors crucial to the economy such as finance and insurance.

Moreover, this week’s EU Committee report described the continued uncertainty and lack of time for a deal, combined with the pandemic, as “a potent threat to economic prosperity and political stability in Northern Ireland”. As my colleague Baroness Hayter put it during an online debate in the Lords this week: “Businesses still do not know what to expect by way of customs processes, regulatory checks and exit summary declarations on goods from GB to Northern Ireland. Without a comprehensive free trade agreement, the consequences for Northern Ireland could be seismic”.

Given the political capital the government has spent on “getting Brexit done”, including the capital it has spent on protecting the chief architect of the leave campaign, I understand its reluctance to prioritise achieving a good negotiated result over sticking to a self-imposed deadline.

But, in the words of the Chancellor of the Exchequer, Rishi Sunak, “this is not a time for ideology and orthodoxy, this is a time to be bold – a time for courage”. That courage would be best demonstrated by the government taking a flexible and pragmatic approach to negotiating a deal with the EU to protect UK businesses, jobs and prosperity.

The EU’s chief negotiator, Michel Barnier, has said an extension would be considered and every reputable body and commentator says that we ought to extend the timetable.

We were told last October in the government’s political declaration that its goal was to secure “an ambitious, broad, deep … partnership … with a comprehensive … Free Trade Agreement at its core”. If, as now seems extremely likely, the time has run out in which to secure that partnership, then the government must have the courage to ask for more time.

By Lord Alf Dubs - Labour Peer, former MP for Battersea and human rights campaigner

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