Potential Impacts of a 'no-trade deal' Brexit
The third and final scenario we have considered is the potential impacts on equalities groups under a no-trade deal Brexit. This may happen in the case that the UK fails to agree a trade agreement with the EU by December 2020 (or fails to decide in the Joint Committee together with the EU to an extension to the transition period, a decision which must be made by 1 July 2020) and the UK then becomes a 'third country' in relation to the EU and reverts to World Trade Organisation (WTO) rules.
The possibility of a no-trade deal Brexit is important to consider given the UK Government's commitment to leaving the EU at the end of the transition period (31 December 2020), and its current refusal to consider agreeing to an extension to the transition period. Indeed, UK Ministers are prohibited from agreeing an extension to the implementation period at the Joint committee by the revised (December 2019) EUWAB, even though the EU's international trade deals "usually take seven years" involving over 30 stages, according to the European Commission. The President of the European Commission, Ursula von der Leyen, said that it might not be possible to negotiate a comprehensive trade deal with the UK by the end of December 2020, and that negotiations should instead focus on a number of priority areas. Michel Barnier, Head of the EU's Task Force for Relations with the United Kingdom, also said that the compressed timescale (11 months) to negotiate a future UK-EU relationship was 'hugely challenging'. The Prime Minister also admitted that there was a chance that the UK will not conclude a trade deal with the EU before the end of his self-imposed deadline of December 2020.
This section should be largely seen as additional to the 'hard' Brexit scenario, as many of the impacts in the hard Brexit scenario would still be likely to happen under a no-trade deal Brexit, where there is a significant rupture to UK-EU relations. This analysis draws especially on the UK Government's 'Operation Yellowhammer' report as well as analysis on the economic impacts of reverting to WTO rules.
(1) Economic impact
In 2018, the UK Government published economic analysis of the impacts of a no-trade deal Brexit, whereby the UK would revert to a WTO-based trading relationship with the EU. The analysis signals that this would have a negative impact on the economy, leading a reduction of between 7.7% and 9.3% in GDP growth. A WTO outcome was considered alongside a 'hard' Brexit and other options, and "resulted in GDP being lowest over the roughly 15-year period the analysis considered." The imposition of tariff and non-tariff barriers between the UK and EU on the first day after the transition period under a no-trade deal Brexit (currently estimated to be 1 January 2021) would likely have a significant impact on sectors of the UK economy that rely on UK-EU trade in goods, in particular, car manufacturing, agriculture, pharmaceuticals and chemicals, where EU tariffs and quotas would be high. Furthermore, any interruptions to transportation across the Channel resulting from the creation of customs and regulatory checks (with the UK government estimating delays of 1.5 to 2.5 days for HGVs crossing the border in its Operation Yellowhammer report on a no-deal Brexit) could significantly disrupt supply chains. The Centre for Economic Performance estimated that a no-trade deal 'WTO-rules only' scenario would reduce the UK's trade with the EU by 40% over ten years, leading to a relative fall in income per head of 2.6% per year. Finally, even if a trade agreement is signed before the end of the transition period, several commentators, including Sir Ivan Rogers, have warned that it is unlikely that the UK and EU will be able to negotiate a deal on services within such a short timeframe – which could have a negative impact on the services sector. The UK Government acknowledges that the economic impacts of a no-deal Brexit would disproportionately affect low-income groups, among which many equalities groups fall.
(2) Shortages in health and medicine
According to the Operation Yellowhammer report, significant haulage and transport disruptions across the Channel Straits – which is possible under a no-trade deal Brexit and the sudden imposition of WTO rules and customs checks – could "have an impact on the supply of medicines and medical supplies… making them particularly vulnerable to severe extended delays." People most affected by delays or shortages in medicine cover several equalities groups, including people with long-term illnesses, disabled people, older people, children and young people, pregnant women and mothers- which health unions say could result in fatalities.
(3) Rising food prices
When forecasting the possible impacts of an unmanaged no-deal Brexit, the Yellowhammer report stated that a combination of interruptions in the food supply chain following a no-deal Brexit, and the expectation that "certain types of fresh food supply will decrease," and this "will reduce availability and choice of products and will increase price, which could impact vulnerable groups". These impacts are potentially still likely under a no-trade deal Brexit, due to the sudden imposition of tariffs and non-tariff barriers on trade in goods (including food) between the UK and the EU, and the impact of customs checks on transport and infrastructure at ports. Increasing food prices will disproportionately impact low-income groups, which cuts across several equalities groups, including minority ethnic people, women, disabled people, older people, asylum seekers and refugees.
(4) Rising energy prices
The Yellowhammer report stated that "there will likely be significant electricity price increases for consumers (business and domestic)" in the case of a no-deal Brexit. In the case of a no-trade deal Brexit, this scenario is still possible, as the imposition of tariffs and non-tariff barriers on trade in goods and services between the UK and EU (including energy) is likely to increase costs for businesses, and potentially push up prices for consumers. The Yellowhammer report states, "low income groups will be disproportionately affected by any price rises in food and fuel."
(5) Safeguarding and protection
If the UK fails to negotiate a comprehensive trade agreement with the EU by the end of the transition period, which covers continued cross-border cooperation on crime, data and information sharing, there are risks to the safeguarding and protection of vulnerable groups. The Yellowhammer report stated that "law enforcement data and information sharing between UK and EU will be disrupted" in a no-deal Brexit. If a deal on the future relationship of the UK and EU – which enables the UK to cooperate with/access systems such as Europol, SIS II and the European Arrest Warrant – is not agreed by the end of December 2020, this will raise concerns that cross-border safeguarding and protection for vulnerable groups – including for instance, children – may be reduced. This could lead to an increase in the number of victims of crime.
(6) Loss of rights
The EU (Withdrawal Agreement) Bill provides for the rights of EU (and EEA EFTA and Swiss) citizens in the UK as set out in the Withdrawal Agreement (and corresponding EEA EFTA and Swiss agreements. The citizens' rights provisions in the Withdrawal Agreement set out a framework for the continued legal residence (and associated rights) of EU citizens living in the UK, and UK nationals living in the EU, at the end of the transition period. The introduction of the EU Settlement Scheme means affected individuals in the UK must apply in order to obtain residence and other rights as set out in the Withdrawal Agreement. In line with the Withdrawal Agreement, the rights of UK nationals living in other EU member states following Brexit and their rights to residence are similarly dependent on the decisions about eligibility made by individual EU member states. Furthermore, their rights to healthcare, social security and pensions are to be negotiated in a future UK-EU trade agreement. If the UK fails to secure agreement on these matters by December 2020 and there is a no-trade deal Brexit, UK citizens living in the EU may lose these social rights. The UK Government expects this to affect in particular, "UK pensioners, workers, travellers and students" who will "need to access healthcare in different ways, depending on the country."
(8) Social care crisis
The Yellowhammer report acknowledges that the social care market is 'already fragile' and that a no-deal Brexit will lead to "an increase in inflation following EU exit [that] could significantly impact adult social care providers due to increasing staff and supply costs, and may lead to provider failure." This scenario is still possible under a no-trade deal Brexit, due to the abrupt ending of free movement (and no UK-EU mobility agreements to enable some migration flows) combined with the creation of trade barriers between the UK and EU. However, a future trade agreement is likely to include a mobility framework (which is an ambition stated in the Political Declaration accompanying the Withdrawal Agreement), which could enable youth mobility between the UK-EU, which could help fill gaps in the UK social care sector. Without this, the impact of a no-trade deal Brexit on social care recruitment and service provision is likely to particularly affect disabled people and older people.
(9) Community tensions
The Yellowhammer report expected that, under a no-deal Brexit, "protests and counter-protests will take place across the UK and absorb significant amounts of police resource. There may also be a rise in public disorder and community tensions." While the Yellowhammer report does not disaggregate the likelihood of community tensions on a regional or national basis in the UK (for instance, with Scotland experiencing fewer incidences of reported hate crimes than other parts of the UK), it is possible that, in the case that the UK fails to negotiate a trade deal with the EU, there may be a rise in (reported and unreported) hate crimes, for instance against EU nationals and minority ethnic groups.
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