British government has not assessed impact of no-deal Brexit

The British government has not assessed the full impact of leaving the European Union with no exit deal, Brexit secretary David Davis has told MPs. He said that leaving without a deal would mean falling back on World Trade Organisation (WTO) rules and the possible introduction of border checks, but officials have not yet estimated the impact on the economy or on business.

“Much of this is about mitigation. Any forecast that you make depends on the mitigation. As a result, it is rather otiose to do the forecast before you have concluded what mitigation is possible,” he said.

Addressing the House of Commons Brexit committee, Mr Davis repeated Theresa May’s claim that no deal would be better than a bad deal for Britain. He said there were potential benefits to leaving the negotiations without a deal, including the freedom to reduce tariff barriers with non-EU states.

“I can’t quantify it for you in detail yet. I may well be able to do so in about a year’s time. But it’s certainly the case. It’s not as frightening as, frankly some people think. But it’s not as simple as some people think,” he said.

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Open agreement

Foreign secretary Boris Johnson and international trade secretary Liam Fox both speculated in recent days about the possibility that negotiations with the EU would end without a deal. But Mr Davis insisted on Wednesday that he would prefer to reach "a free-trade, friction-free, open agreement" with the EU.

European Council president Donald Tusk on Wednesday warned that the consequences of failure in the negotiations would be greater for Britain than for the EU.

"The claims increasingly taking the form of threats that no agreement will be good for the UK and bad for the EU need to be addressed. A no-deal scenario would be bad for everyone, but above all for the UK because it would leave a number of issues unresolved. We will not be intimidated by threats and I can assure you they simply will not work," he told the European Parliament.

Reckless talk

Labour's shadow Brexit secretary Keir Starmer said it was time for the government to rule out leaving the EU without an agreement. He said ministers were recklessly talking up the prospect without having any idea of its consequences.

“What’s clear, from the CBI [Confederation of British Industry] and others, is that there is no result that would be worse for the British economy than leaving with no deal; no deal would be the worst possible deal. The government should rule out this dangerous and counter-productive threat before article 50 is triggered,” he said.

The prime minister is expected to trigger article 50 of the Lisbon Treaty during the last week in March, starting two years of formal negotiations on leaving the EU. She told parliament this week that she was confident of securing an agreement that would be good for both Britain and the EU.