No Deal ‘would be chaotic and damaging’

BRITAIN risks a ‘chaotic and damaging’ Brexit if there is no deal with the EU, MPs warn today.

Members of the Commons Brexit Select Committee say Theresa May must amend her Chequers plan if the EU will not accept it and caution that having no deal would leave many firms ‘facing huge uncertainty’.

In a report, they urge the PM to consider staying in a customs union and the European Economic Area as a fallback position. However, No10 has repeatedly ruled out staying in the EEA, which would keep Britain in the single market.

The MPs’ conclusions were rejected by several of the committee’s Eurosceptic members, including Tory MP Jacob ReesMogg, chairman of the pro-Brexit European Research Group. He said reverting to World Trade Organisation rules if there is no trade deal would not be as bad as the report suggests, and would even deliver advantages.

However, the International Monetary Fund warned yesterday of the disastrous consequences for the British economy of a no-deal Brexit, including a potential recession. The pound could plummet and the economy could go into reverse, IMF chief Christine Lagarde claimed.

Risking a rift with No10, Chancellor Philip Hammond suggested a no- deal Brexit could undo efforts to rebuild Britain’s economy since the financial crisis a decade ago.

Speaking alongside Mrs Lagarde at the Treasury yesterday, he said: ‘Leaving without a deal would put at risk the substantial progress the British people have made in repairing our economy.

‘That is why it is so important for this country that we reach a negotiated agreement on our future relationship.’

Mrs Lagarde, a former French minister, added that a no-deal scenario could cause severe disruption to trade, with air travel and movement of goods at risk. She said: ‘Our assumption is it would have very dear economic consequences. It would be a shock to supply and it would inevitably have a series of consequences in terms of reduced growth, increased deficit, most likely a depreciation of the currency.

‘It would, in reasonably short order, mean a reduction in the size of the UK economy.’

The IMF predicted that Britain’s economy will grow by 1.5 per cent this year and next if Britain leaves the EU with a deal.

But Mrs Lagarde, 62, claimed Britain will be worse off outside the EU regardless of what deal is struck.