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The report – No deal Brexit: issues, impacts and implications – shows that once the UK is outside the Article 50 framework it will be far harder, and take far longer, to get a deal with the EU. All member states’ national (and some sub-national) parliaments would need to ratify any deal.
The EU is unlikely to start negotiating a future relationship with the UK until the major issues in the Withdrawal Agreement – citizens’ rights, the divorce bill and the backstop – have been resolved. And the EU could withdraw or allow to expire any of the unilateral mitigations it has put in place, such as on road and air transport.
While the UK’s priority will be the continued flow of goods – even if this results in loss of tax revenue – the EU has emphasised it will implement existing rules, rather than prioritise the maintenance of trade flows.
The imposition of tariff and non-tariff barriers between the UK and its largest trading partner will be a major shock to the UK economy. Beyond that, the fall in the pound – most if not all of which will be priced in well before October 31 – will push up inflation, as after the referendum, reducing real wages.
However, disruption on day one may not be as immediate and visible as earlier reports have predicted. Businesses, and government, have put in place contingency plans to mitigate against the worst effects. Therefore, the financial system will not collapse, the stock market will not crash and interest rates won’t skyrocket. [...]