No-deal Brexit would spawn 'legal morass and economic disaster'

Leaving the European Union without a deal in place would have, “widespread, damaging and pervasive” effects on Britain’s economy and legal system, a report says.

Even after the general election wiped out the Conservatives’ majority and denied Theresa May the increased negotiating mandate she asked the public for, she has stuck with the mantra that “no deal is better than a bad deal”.

But a Changing Europe report, which brings together experts from politics, law and economics, finds that exiting in March 2019, when the Article 50 process is due to end, without first striking an agreement, would hit everything from the nuclear industry to the security of legal contracts.

Professor Anand Menon, of Kings College London, said: “Our findings show a chaotic Brexit would, at least in the short term, spawn a political mess, a legal morass and an economic disaster. This report makes it clear ‘no deal’ is an outcome the British government must strive to avoid.”

The report examines the risks of four no-deal scenarios, including a “timed-out Brexit”, where the two-year deadline set when Theresa May triggered article 50 in March expires without agreement; and a “premature Brexit”, with talks breaking down before the deadline, because Britain walks away.

A “cliff-edge” Brexit would result if the exit deal is struck, resolving issues such as Britain’s share of EU liabilities, but no new free trade deal is reached in time – a fear that has prompted the chancellor, Philip Hammond, to push for a “transitional” period to offer businesses certainty. And worst of all, a “chaotic Brexit” would mean no deal at all, even on the terms of exit.

The report finds that any of these scenarios would leave a myriad of unanswered questions about whether planes could legally take off; whether nuclear materials could be transported safely; and which bodies would judge whether drugs could be safely used.

The government’s EU (withdrawal) bill, published last week, creates the power for ministers to create new regulators to take over jobs currently carried out by European Union bodies, and to bring all EU laws on to the UK statute book.

But the government faces formidable hurdles in passing the legislation and carrying out the reforms necessary, even if a deal is struck with the EU in time.

“No deal doesn’t mean the country would come to a stop. But even under relatively benign conditions and with time to prepare, the impacts would be widespread, damaging and pervasive,” Menon said.

The warning comes after it emerged that the government has spent £1.2m of taxpayers’ money defending legal action, including the case brought by Gina Miller to force Theresa May to offer parliament a vote before formally embarking on Brexit.

The annual report of the Department for Exiting the European Union, published on Wednesday, showed legal costs were the most significant area of expenditure after staffing.

In total, David Davis’s department spent £3.7m on legal costs. Of that, £2.2m went on commissioning legal advice on policy from government lawyers. And of the remainder, £1.2m was accounted for by two legal cases – the article 50 case and a separate action over Britain’s membership of the European Economic Area.

Liberal Democrat Brexit spokesperson, Tom Brake, said: “This £1.2m bill is a kick in the teeth for taxpayers. The Conservatives fought every step of the way in the courts to try and avoid proper scrutiny over Brexit, now the public is having to pick up the tab.”