By: Marc Wessels

A no-deal Brexit would severely disrupt trade between the UK and the remaining EU member states, and the consequences for both the UK and the EU would be significant. Here, we take a look at some of the most important consequences for the UK: what would be the immediate financial impact of a no-deal Brexit, and how would the UK be affected?

No trade agreement

The most important consequence of a no-deal Brexit is that there would no longer be a trade agreement between the European Union and the United Kingdom. All existing agreements would expire and a new trade agreement would have to be concluded. Without a trade agreement, waiting times at customs would increase and, under certain circumstances, this could lead to major problems. Take the drought that plagued the UK last summer, for example, which caused a decrease in food production on the British isles. In such instances, longer waiting times at customs could hamper food import, which could potentially lead to shortages.

Import levies will increase under a no-deal Brexit

There are currently price agreements in force between the United Kingdom and the European Union. These agreements are especially relevant to the food industry, with more than a third of all food and drink in the UK being imported from the EU. Higher import prices as a result of a no-deal Brexit would lead to inflation, which would in turn result in a lower standard of living for the British population. In other words, a no-deal Brexit would cost the average Brit a good deal of money.

Export duties must be renegotiated

If there’s no deal, the benefits for exporting from the UK to the EU will expire. This means that, if no new agreements are made, the British would have to start paying substantial export taxes. For tobacco, for instance, these levies could be as high as 74%. The auto industry will be affected as well, with an expected 10% increase in export levies. Because selling products on the European market will become more expensive for British companies, net yields will drop.

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