Airlines grounded and no more X-Factor: Lords warn of Brexit risks

Aviation, the creative industries and other business areas that form part of the UK’s huge non-financial services sector face “serious harm” if the country walks away from the EU without a comprehensive free trade agreement.

A report from the Lords European Union Committee warns that aviation and broadcasting are at particular risk as there are no World Trade Organisation rules for them to fall back on if no deal is reached.

The report strongly urges politicians to seek a transitional arrangement early on in the negotiations, given the comprehensive free trade agreement required will take more than two years to negotiate.

UK broadcasters, including the BBC could lose the right to sell TV formats to European countries, an area of astonishing success in recent years, with the international success of formats like X Factor and Strictly Come Dancing making huge sums for their creators. UK airlines may also be forced to move abroad.

Without no formal agreement or transitional deal, it is possible UK airlines could lose their right to fly to, from and between European countries. They could even lose the right to fly to the USA, an arrangement currently governed by the EU-US Open Skies agreement.

The committee heard evidence from UK airline EasyJet, who told them if no free trade agreement was reached, it would go to the EU to seek an EU certificate to carry on operating within the EU. For it to be granted, it could require the company to become majority owned by EU, rather than UK citizens.

The report also found that the movement of EU workers in and out of the UK was “necessary to support growth” in the services sector.

The value of the UK’s non-financial services was estimated at £162 billion in 2015, making up around a third of all UK exports, and also runs at a trade surplus, meaning that it is one of few economic areas in which the UK exports more than it imports.

Committee chair Lord Whitty said: "The UK is the second largest exporter of services in the world and the EU receives 39% of the UK's non-financial service exports. This trade is critical to the UK's economy as it creates employment and supports goods exports - we can't afford to lose that.

"To protect the UK's status as a global leader of trade in services, the Government will need to secure the most comprehensive FTA that has ever been agreed with the EU. Walking away from negotiations without a deal would badly damage UK plc, particularly in sectors such as aviation and broadcasting which have no WTO rules to fall back on."