No-deal Brexit ‘would cost firms €65bn’

A NO-DEAL Brexit would cost businesses across the EU and the UK a massive €65.5billion each year, a new study suggests.

The report, published yesterday, examined the impact of a UK-EU relationship under World Trade Organisation tariffs.

New regulatory barriers would cost companies in the EU some €35billion, while UK firms would be saddled with €30.5billion in extra costs, the study – by consultant group Oliver Wyman and legal firm Clifford Chance – has found.

Here in Ireland, the biggest danger would be to the agricultural sector – which the report flags as a ‘particular pinch point’, due to its reliance on trade with the UK. However, the report – titled ‘The Red Tape cost of Brexit’ – also found that the €65.5billion cost of a no-deal Brexit would drop significantly if Britain were to remain in a customs union. If this new agreement were to broadly reflect the rules of the existing customs union, the overall cost would drop to €35.5billion – €19billion for UK firms and €16.5billion for those in the EU.

The report states: ‘Sectoral differences mean a customs union would reduce costs to the EU27 more than it would to the UK, given that 76% of EU27 exports to the UK are in goods compared to 62% for UK exports to the EU27. These increased costs and uncertainty threaten to reduce profitability and pose existential threats to some businesses.’

However, UK prime minister Theresa May has ruled out remaining in an EU customs union as it would prevent Britain from striking new trade deals with growing world economies such as China and India.

ACCORDING to a new report, a no-deal Brexit would cost the remaining EU member states a total of €31billion a year. And it doesn’t take a rocket scientist to work out that Ireland will be the country worst affected in the event of that scenario coming to pass.

There seems little doubt that the Government’s tough stance on the border issue, which is strongly supported by ordinary citizens, could increase the risk of no deal being agreed upon. The bottom line, though, is that Leo Varadkar and his Cabinet colleagues have to take what they believe to be the right course of action.

But the brutal reality is that if there is no deal, we would both need and expect Brussels to step up to the plate in recognising that Ireland is a unique case. Nor would soothing words and vague promises be sufficient.

What we would require is very real support in terms of financial aid to offset the seismic effects on the economy. Accordingly, the Government needs to make sure that proper contingencies are in place if Britain does end up leaving the EU without a deal.