No-deal Brexit will be ‘chaotic’

IMPACT: FAILURE TO AGREE TRADE TERMS BAD FOR UK

The British pound fell last week, in part on concern about the state of negotiations.

The short-term market impact will be significant if Britain leaves the European Union (EU) without a deal, British Foreign Secretary Jeremy Hunt said during a visit to Latvia yesterday.

Britain is due to quit the EU in less than eight months, but the government has yet to agree with Brussels the terms of its departure. It has stepped up planning for the possibility of leaving without a formal agreement.

Sterling fell last week, in part on concern about the state of negotiations and the chance of a nodeal Brexit.

Asked about the possible market reaction to leaving without a deal, Hunt said: “Of course, there will be significant short-term impact, but I think in these situations the British economy would find a way to get through it and, indeed, we’d find a way ultimately to thrive and be successful.”

Latvian Foreign Affairs Minister Edgars Rinkevics, who met with Hunt yesterday to discuss Brexit, told the same news conference he now estimated the possibility of reaching a deal by the March 29 exit day was 50-50.

Hunt said he did not want to put a percentage on it. “Rather than speculating on exact percentages, let’s work hard to make sure that doesn’t happen.”

During a visit to Helsinki on Tuesday, Hunt said the risk of a no-deal Brexit has been increasing and everyone needed to prepare for the possibility of a “chaotic no-deal Brexit”.

Both London and Brussels say they want to reach agreement at an October 18 EU Council, but diplomats think that target date is too optimistic.

EU Brexit negotiator Michel Barnier rejected key elements of British Prime Minister Theresa May’s trade proposals last month.

Economists say failure to agree the terms of leaving would do serious damage to the world’s fifth-largest economy as trade with the EU, Britain’s largest market, would become subject to tariffs.