The UK needs to ‘urgently’ find draw up an alternative to Theresa May’s Chequers to avoid crashing out of the EU with a ‘chaotic and damaging’ Brexit, MPs warned in a new report on Tuesday (18 September).
Time is rapidly running out for EU and UK negotiators to avoid a ‘no deal’ scenario, under which the UK would leave the EU next March without a withdrawal agreement and 21 month transition period of access to the EU’s single market. The original final deadline of an EU summit in October now appears to have been pushed to mid –November.
The committee of senior MPs, but which has no legislative power, was split over the impact that a no-deal Brexit would have, but agreed by a narrow majority that it would be “chaotic and damaging”.
“If the Chequers Plan is not acceptable as a basis for that, then the Government will need to find a different approach urgently. Alternatives are either an EU-UK Customs Union and alignment on relevant EU rules, or EEA membership and a customs union, but neither are Government policy,” said Hilary Benn, the Chairman of the cross-party Brexit committee
However, it stated that the government’s first priority “must be to secure a Withdrawal Agreement”.
On Monday, IMF Managing director Christine Lagarde warned that a ‘no deal’ Brexit would inevitably lead to reduced economic growth, an increased budget deficit, and a weakening of the pound, as the Fund downgraded its forecasts for the UK economy, projecting growth of about 1.5% in both 2018 and 2019.
“If that happened there would be dire consequences. It would inevitably have consequences in terms of reduced growth, an increase in the [budget] deficit and a depreciation of the currency,” said Lagarde, adding that “in relatively short order it would mean a reduction in the size of the economy.”
However, the IMF boss argued that all of the most likely Brexit options would have a negative economic impact on the UK and EU economies.
“Compared with today’s smooth single market, all the likely Brexit scenarios will have costs for the UK economy, and to a lesser extent for the EU, as well. The larger the impediments to trade in the new relationship, the costlier it will be. This should be obvious, but it seems that sometimes it is not,” said Lagarde.
The party conference season opened this week with the pro-European Liberal Democrats holding their four day gathering in Brighton on the south-coast. Gina Miller, the financier who took the government to the High Court, and is fronting the campaign for a second ‘People’s vote’ on the outcome of the Article 50 negotiations, was the main speaker.
Despite continuing to campaign for the UK to stay in the EU, in a bid to tap into the support of the 48% of ‘Remain’ voters, the Liberal Democrats have struggled to make any headway and are currently polling just below 10%.
The week-long gatherings of Theresa May’s Conservatives and the opposition Labour party are also expected to be fractious affairs dominated by the parties respective divisions on Brexit.