Nobody knows exactly what a no deal Brexit would look like, in part because it would be an unprecedented event. In Management Today's September print edition, we asked five experts from economics, law, talent and supply chain to give us their clear-eyed assessment of likely outcomes.
Here, we take a quick look at how a no deal is seen from within eight broad segments of the economy.
Every car is made of up to 30,000 parts, many of which come from the EU. Though these would still be imported tariff-free in a no-deal Brexit, any border delays would threaten a smooth supply chain. Meanwhile, eight out of every 10 cars produced in the UK are exported. With a tariff of 10.6 per cent on vehicles, the average family car would cost non-UK buyers an extra £1,500 so a squeeze would likely be made on production costs, probably at the expense of jobs.
According to the National Farmers’ Union, exports to the EU would be all but stopped by double-digit EU tariffs. At the same time, WTO rules would dramatically intensify domestic competition by cutting prices of non-EU imports, such as US cereals and Brazilian beef. Farms could lose migrant labour and also the EU subsidies upon which 60 per cent of them rely, though that income would be replaced by UK environmental subsidies until 2022.
The high street is already suffering as a result of online competition, changing consumer tastes and relatively burdensome business rates. No deal is unlikely to help. Andrew Goodacre, CEO of the British Independent Retailers Association, says: "91.96 per cent of our members are expecting cost increases – whether modest or significant – as a result of Brexit."
Construction and property
There are estimated to be 194,000 construction workers from the EU in this country and, despite assurances from Boris Johnson, their rights are still in doubt, with home secretary Priti Patel pressing for an immediate end to free movement in the event of no deal. In any case, property prices are predicted to fall sharply in the short term, with banks tightening their lending criteria, slowing property development.
UK lawyers would no longer be able to practise automatically in EU member states, instead relying on the WTO’s General Agreement on Trade in Services. This would lead to widespread operational differences, though exactly what these would be is unclear, according to the Institute for Government.
The City has set up capitalised subsidiaries in EU27 countries to offset any trading issues but at considerable cost – around £1tn of assets have been moved from the UK to the EU. It’s anticipated that around 7,000 financial services jobs might be lost, according to Ernst & Young, though that’s fewer than previous predictions.
Since GDPR is a European law, data transfer between the UK and EU could be affected by a no-deal Brexit, particularly from Britain into Europe. Free movement of people is another key issue, since around 8 per cent of UK tech workers are from other EU states. However, Google chief executive Sundar Pichai says the company is "committed to the UK" and Google, Facebook, Amazon and Snap have all announced plans to expand their UK teams.
The government plans to introduce zero tariffs on the majority of products in the event of a no-deal Brexit could have a devastating effect, flooding the market with cheap imports. Manufacturing represents 11 per cent of UK GVA (gross value added) and employs 2.6 million people, so any downturn would have a significant effect on the wider economy.
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