What is a no-deal Brexit?
A no-deal or WTO Brexit means the UK leaves the EU at 23.00 on Brexit day with no agreement in place as to any future relationship.
What happens immediately
- The UK leaves the single market and customs union overnight.
- The arrangements designed to help trade between EU members would be eliminated, and the UK’s membership of institutions such as the European Court of Justice and Europol would end immediately.
- The UK would immediately end payments into the EU budget, currently around £9bn a year.
As there would be no time to create a UK-EU trade deal, trade will revert to terms set by the World Trade Organisation (WTO):
- Tariffs (taxes on imports) will apply to most goods UK organisations send to the EU, while importing goods from the EU could get more expensive.
- After a no-deal Brexit, UK businesses may have to pay extra duties or taxes on imported goods. The government has pledged that 87% of imports by value would be eligible for zero-tariff access (most tariffs are applied by the country importing).
- Many goods would have to undergo border checks, causing disruption to supply chains.
- The UK’s strong financial services industry would lose its guaranteed access to the EU single market, with potentially negative implications for the economy.
It remains unclear what would happen to the Irish border under a no-deal Brexit. Many fear the return of what’s known as a ‘hard border’ on the island, with checkpoints that currently aren’t necessary.