As the possibility of a no-deal Brexit scenario increases, and the government publishes its “no-deal preparedness” notices, it is worth taking stock of the sheer variety of problems that would arise with a no-deal Brexit – and the devastating consequences that would arise from such a legal limbo. Here’s what we know so far:
Administrative headache to drive in the EU
Outside of the EU legislation that makes national driving licenses recognised across Europe, British citizens would have to apply for separate permits in order to drive in the EU (and vice versa). The Post Office may have to issue around seven million international driving licences in the first year, and it does not have sufficient infrastructure to cope with demand at this scale.
Milk, vegetables, fruit and other everyday items would cost more
Consumers will face dramatic price rises because, under WTO (World Trade Organisation) rules, leaving the EU customs union means tariffs will be added to products imported from the EU, ranging from 45% on cheese to 10% on clothing and footwear. The government has indicated retailers would have to stockpile food as delays at the border may lead to dwindling food supplies.
EHIC safety net no longer viable
If you fall ill while in Europe and require urgent medical treatment, your European Health Insurance Card (EHIC) will no longer be valid. Brits would need to take out costly private health insurance instead.
Broadcasters face massive red tape
To continue broadcasting in Europe, around six hundred multinational broadcasters licensed in London will have to have to seek licenses/relocate to EU countries, since the UK will no longer be a part of the common legal system for cross-border broadcasting.
Fish could be left to rot
If we leave the EU without a preferential trade agreement, WTO rules will apply, to the fish we export to the EU (which is most of the fish we catch!), adding tariffs ranging from 2% on Atlantic Salmon to 20% on frozen mackerel. Moreover, if we leave the customs union, there will be rules of origin and other customs checks at borders, requiring stacks of paperwork and delaying hauliers. And if we fall out of the EU legislation on common hygiene standards, consumer guarantees and so on, there will be further red tape and border inspections. All this could lead to fish rotting at borders before making it to their destination.
Tourism under threat
The EU is the main destination for 75% of UK holiday, leisure and business trips. As travel companies rely on the freedom of movement of staff, resources and financial transactions, dropping out of the single market and customs union could prove disastrous for the sector. Seasonal Businesses in Travel (SBIT UK) has warned that 25,000 jobs will be at risk and the average price of holidays could rise by 31%.
Houston, we have a problem!
Outside of the EU, we would no longer be part of the Galileo satellite project which could spell ruin for the many companies in the UK who were relying on being able to bid for future technological and production contracts. Galileo is the EU’s multi billion euro satellite programme to give Europe control over its global positioning service and increase security capabilities, to which the UK has already contributed over £1bn. Not only would the UK have to wave goodbye to this investment, it would also need to find between £5-8 billion to replace it with its own system.
Lack of research funding on the horizon
Access to the EU’s research and innovation grant scheme, Horizon 2020, could cease entirely. More optimistic scenarios consider that UK universities and research institutes could still bid for some categories of funding, but at least 45% of Horizon 2020 funding would legally no longer be accessible. The UK draws down €1.283 billion per year of Horizon 2020 grants, so even this best-case scenario would cost €577.35 million a year. Many UK institutions rely heavily on these grants and the immediate shortfall could result in a loss of global competitiveness in science and innovation.
The return of “rip-off fees”
Cross-border payments will no longer be covered by the surcharge ban which came into force in January. In the run up to the ban, the government referred to the additional charges added to credit card transactions as “rip-off fees”. They have now outlined in the no-deal technical papers that these charges will return if no deal can be agreed upon, potentially costing UK consumers. In 2015 the cost of these fees was £166 million per year.
Gas and electricity more expensive
Gas and electricity prices would rise as the UK drops out of the EU Energy Market and Euratom, which currently provide the legal basis for smoothly trading electricity and nuclear fuel across borders.
Cost of trade in oil and gas would rise
The oil and gas industry has warned that trade in their products would cost half a billion more per year.
Guinness production stalled
From grain to glass, the manufacturing process for Guiness involves criss-crossing the Irish border several times. In the event of a no-deal, each crossing would face substantial delays and costs.
Major delays at main ports and on motorways
Additional customs checks at UK ports would lead to major delays and higher costs. Plans are being made to turn the M20 into a lorry park for up to 1,400 vehicles. Costs to hauliers will be punishing; a delay of a refrigerated lorry is estimated to cost around £500 per day.
Legal limbo in Gibraltar
The 12,000 people who travel from Spain to Gibraltar for work everyday would face huge uncertainty over their rights. Gibraltarian locals, 96% of whom voted to stay in the EU, would see cross-border trade hampered, as 96% of all goods enter by land from Spain, and their own services sector would be severely damaged.
The NHS and adult social care could face major staffing shortages
Currently, the NHS in England relies on 62,000 workers from the EU (5.9% of the workforce). England also employs around 95,000 EU citizens (around 7% of the total workforce) in its adult social care sector. A no-deal Brexit would remove the current legal basis for these vital EU citizens right to work in the UK, exacerbating the staffing crisis in these already stretched sectors.
UK becomes fraudsters’ paradise, retailers lose out on VAT receipts
The government says it is prepared to sacrifice VAT collection at the borders to speed up checks, potentially crippling retailers with an influx of cheaper untaxed goods. This could also mean big losses for the treasury, since in 2017, VAT accounted for 18% of the UK’s total tax receipts.
Chaos for manufacturing
Leaving the single market and customs union will see manufacturers’ supply chains disrupted. Industries such as car manufacturing rely on “just in time” production, so long queues and delays at the border will disrupt production. The automotive industry employs more than 850,000 people directly and indirectly in Britain and accounts for almost a tenth of British manufacturing output.
Chaos for insurance and banking
If UK insurers and banks are no longer covered by legislation that enables them to passport their services across Europe, cross-border financial commitments and transactions will become more cumbersome and difficult, and in some cases impossible. Banks and insurers have warned that unless an agreement is signed, they may not be able to honour £26 trillion of derivatives and as many as 36 million insurance policies.
Organ donor and sperm donor shortage
Leaving the EU legal framework of the Organ Donor Directives and EU Tissues and Cells Directives, would cause delays for people receiving treatment in the UK, as many currently use material from other EU countries. The government’s no-deal technical papers even set out the need for contingency plans to find alternative sources of sperm to replace the 3,000 samples we currently import from Denmark annually (50% of the UK’s male reproductive material imports).
Goodbye Data Protection Regulations
The UK could enter a “data limbo” by dropping out of the EU’s data protection legislation, which allows for the frictionless flow of data across EU countries while securing privacy and safeguards. The cross-border flow of personal data has become vital for the UK as the digital economy has expanded dramatically over the last twenty years and an estimated three quarters of the UK’s total data flow is with EU countries.
Consequences for Northern Ireland
A no-deal Brexit could see twenty years of peace in Northern Ireland dangerously undermined. A hard border with the Republic of Ireland, an agricultural economy hit by WTO tariffs, and severing the island-wide energy network could prove extremely damaging to economic stability in the North, and also risk a return to dangerous sectarianism.
Flights grounded across UK airports
Flights between the EU and UK could be grounded if we simply drop out of the European Aviation Safety Agreement and the Europe’s Open Skies agreement which set the rules for the aviation industry, affecting not just flights over Europe, but to the rest of the world.
Enormous job losses in the UK
The Treasury has reported that, under World Trade Organisation rules, Britain could expect to lose 820,000 jobs in the first two years.
Further fall in value of the pound
The fall in the exchange rate of the pound was an immediate economic response to the the referendum in 2016, making imports and foreign travel more expensive. If we leave the EU with no deal, sterling is expected to depreciate by a further 15%.
Nuclear power stations in crisis
Dropping out of Euratom puts Britain’s trade in nuclear materials and the maintenance of our nuclear power plants in jeopardy. The UK’s Office of Nuclear Regulation has inadequate resources to cope with the task of regulating the UK’s nuclear industry which leaves question marks over the safety and security of our nuclear facilities.
Shortage of medical supplies
Customs queues will delay and disrupt the 370 million packs of medicine the UK imports from the EU each month. Health Secretary Matt Hancock has laid out plans to stockpile six weeks’ worth of medicines, at a cost to the UK taxpayer of around £2 billion. He has admitted that in a no-deal scenario, some medicines would need to be flown in to avoid delays at ports, if there are urgent shortages, further increasing costs to the NHS. And the NHS will lose automatic access to the radioactive isotopes required for cancer treatments, currently regulated by Euratom.
UK security put in jeopardy
The cross-border sharing of data and the cooperation between police, intelligence services and judiciary has been crucial in tackling crime across Europe and ensuring the security of the UK. Leaving the EU’s police data sharing agreements and EUROPOL (EU Agency for Law Enforcement Cooperation) would leave the UK more vulnerable to organised crime, trafficking and terrorism.
An environmental nightmare
Leaving the EU’s emissions trading scheme and and internal energy market could lead to an increase in carbon emissions from industry and energy sector. Farming could also be adversely affected by the UK leaving the European Environmental Agency; with around 21,000 dangerous chemicals banned in the EU, the UK could become a dumping ground for cheaper and highly dangerous pesticides and chemicals if current standards are not maintained.
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