Ministers 'driving towards cliff-edge blindfolded' over EU no-deal scenario

UK Ministers have been accused of "driving towards a cliff-edge with a blindfold on", after Brexit Secretary David Davis admitted they have made no assessment of the economic implications of failure to secure a deal with the rest of the EU.

Prime Minister Theresa May has declared her readiness to walk away from Brexit negotiations without agreement, insisting that "no deal is better than a bad deal". And Foreign Secretary Boris Johnson said in a TV interview at the weekend it would be "perfectly OK" to crash out of the EU on World Trade Organisation terms.

European Council president Donald Tusk said the signals coming from the UK Government just weeks ahead of the start of negotiations amounted to "threats", but insisted Brussels would not be "intimidated".

Failure to reach agreement on a future UK-EU relationship would be worse for Britain than for the remaining 27 states, he told the European Parliament.

Brexit Secretary David Davis gives evidence to the Brexit Select Committee in the House of Commons, London.

Mr Davis tried to ease tensions with Brussels, urging colleagues to ensure future comments about the upcoming negotiations are "as calm as possible and as amicable as possible".

He issued a barely-veiled swipe at Mr Johnson, telling MPs on the Commons Exiting the EU Committee that he was preparing his strategy on the basis of "facts ... not throwaway lines in interviews".

But he was unable to provide the committee with an estimate of the cost of "no deal", and said it might be a year before he could offer any figures.

Mr Davis confirmed that leaving under WTO rules would mean tariffs of 30-40% on agricultural exports and 10% on cars, the loss of EHIC health insurance cards for travellers and passporting rights for financial sector firms, as well as departure from the EU-US Open Skies arrangements for air transport.

But he said it will be possible to devise mitigating action in response to these issues.

"Any forecast you make depends on the mitigation you make, and therefore it would be rather otiose to do that forecast before we have concluded what mitigation is possible," said the Brexit Secretary.

Mrs May's "no deal is better than a bad deal" mantra was coined "in the emotional aftermath of the referendum (when) there were lots of threats of punishment deals", said Mr Davis.

"We had to be clear that we could actually manage this in such a way as to be better than a bad deal, and that is true.

"I can't quantify it for you yet. I may well be able to do so in a year's time. It's not as frightening as some people think, but it's not as simple as some people think."

Shadow Brexit secretary Sir Keir Starmer accused the Government of "recklessly talking up the idea of crashing out of the EU with no deal" while making no assessment of its potential cost.

"What's clear, from the CBI 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," said Sir Keir.

"The Government should rule out this dangerous and counter-productive threat before Article 50 is triggered."

Liberal Democrat Brexit committee member Alistair Carmichael said the Government's approach was "the equivalent of driving towards a cliff-edge with a blindfold on".

Mr Davis insisted a good Brexit deal was "eminently achievable" and said his impression from speaking to ministers from the remaining 27 member states was that "there is a growing determination to get a constructive outcome".

No deal would be "not as good an outcome as a free trade, friction-free, open agreement", he said.

On the potential stumbling block of a "divorce bill" of up to 60 billion euro (£52 billion) expected to be presented to the UK by Brussels, Mr Davis said that the UK had so far received no demand but was "a law-abiding nation" which would meet its obligations, while also insisting on its rights.

Mr Tusk told the European Parliament he wanted "a smooth divorce and a good framework for the future".

But he added: "I want to be clear that 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."


KEYWORDS: eu, brexit, uk, economy


Most Read in Business

World Markets