Are we headed for a no-deal Brexit?

Aug 30, 2018
With October’s crunch summit fast approaching, the UK and EU remain poles apart on critical issues.


The UK and the EU have been negotiating regularly in the hope of reaching an exit deal that is satisfactory to both sides. Several different proposals have been put on the table and there has been agreement on some, but there are still some unresolved issues – not least the issue of avoiding a hard border on the island of Ireland.

The EU has repeatedly said that “nothing is agreed until everything is agreed” and the UK has said that “no deal for Britain is better than a bad deal for Britain”. So, what happens if agreement is not reached on the Irish border and the UK crashes out of the EU without a deal? Essentially, all of the current rules and regulations could fall into an abyss.

Free trade between the EU and the UK would no longer be possible and trade would revert to World Trade Organisation (WTO) rules, where tariffs and border checks would become an everyday reality. Border checks will inevitably mean long queues at ports, which may not have the capacity to hold the new volume of trucks. Such bottlenecks could result in shortages of food or other components, which will disrupt the supply chains of manufacturers. Currently, trade in food, medicines, mechanical parts and a host of other things are regulated by very strict EU safety standards. If no deal is reached, the UK will need to implement its own standards if it’s to trade with the EU. It’s impossible to know how long this could take, and whether the standards would even be acceptable to the EU. Furthermore, EU citizens living in the UK and UK citizens living in the EU could have their permission to live and work in the relevant territory revoked.

A transition period

A transition period where all current rules stay the same until December 2020 would allow more time for the UK and EU to agree on the finer details of their future trading relationship. However, this grace period can only be introduced if a deal is reached between the UK and EU. So, a no deal Brexit would mean no transition period and the UK’s exit from the EU in March 2019.

The Irish border

The potential for a border on the island of Ireland is the major sticking point in the negotiations. Neither side want a hard border, but both have rejected each other’s proposals to prevent it.

The EU wants, at the very least, for Northern Ireland to remain within a Customs Union with the EU, but this proposal has been rejected by the UK. The UK wants a facilitated customs arrangement, which would see the UK operate customs on behalf of the EU in certain circumstances. The EU is not happy with this proposal, however.

The easiest solution would be for the UK to remain within the Single Market, where rules would essentially stay the same, or within a Customs Union with the EU. But the UK has been very clear that it wants to leave both the Single Market and the Customs Union.

As we look forward to the crucial EU summit in October where a deal must be reached, the clock continues to tick.