Thread by @anandMenon1

We’ve released our new (third) @ukandeu No Deal Report. I’d like to thank the fantastic colleagues who contributed to it: @MeredithCrowle1, @dgbailey, @drsarah_hall, @hayward_katy, @CSBarnard24, @jdportes, @DrAlanWager, @matt_bevington, @hcarrapico @stevepeers 1/25

Here it is, a thing of beauty (and who knew photos were a way of tagging people who don't want to be tagged?) So what might a #NoDealBrexit mean? For those too busy (lazy) to read it, here’s a THREAD (in capitals) of the key points. DEEP BREATH #NoDealExplained 2/25

To the report itself. As we say in the introduction, although the legal consequences of no deal are relatively clear, the practical consequences are far less so. The defining feature of no deal is uncertainty (another photo, more unwilling victims tagged). 3/25

And this uncertainty is particularly acute with the short-term impacts of no deal. What would be the immediate economic effects? How would consumer and business confidence react? How would checks be managed at the Irish border? We simply can’t say at this point. 4/25

But uncertainty is not the same as ignorance. We know what no deal would mean legally: the UK would become a 3rd country. EU law would cease to apply. There would be no transition period. Trade with EU would be governed largely by WTO rules. 5/25

However, in practice most EU rules would continue to apply. The EU (Withdrawal) Act, passed in 2018, brought all EU law into UK law, meaning at the point at which no deal happened our legal regimes would remain broadly in line. 6/25

Which leads to another area we know a bit about: preparations. The EU (Withdrawal) Bill was important in ensuring our legal system continues to function. More primary legislation would be required if, as many expect, the gov had to implement some kind of direct rule in NI. 7/25

There have been measures to ease pressures on trade. Simplified procedures would be introduced for importers, businesses are being automatically registered so they can keep trading with the EU. 8/25

Biggest hole in our knowledge concerns businesses. Indications we do have aren't great. eg gov expected half of lorries heading to France would not be ready for French customs on day one. Govt can do what it likes, but if businesses don't prepare, the impact will be great. 9/25

Partly, this is because many businesses have already been marched up the no deal hill twice, incurring costs in the process, and partly it’s because small businesses simply can’t afford to fork out for contingency measures they may turn out to be obsolete. 10/25

Crucially, day 1 may not be as disruptive as many worst-case scenarios. Businesses would avoid moving supplies and would have stockpiled as far as possible in advance. Plus, there’s a traffic ban in France on 1 November, meaning fewer heavy goods vehicles on the roads. 11/25

Politically, this would support those arguing no deal warnings were ‘Project Fear’. But it might give businesses the impression that the worst was over and lead them to reduce, pause or cancel contingency measures that could well be necessary further down the line. 12/25

What do we expect on day one? A further fall in sterling seems likely, although the adjustment may have already happened in the days leading up. This may also reduce the day one impact. There would also likely be a similar effect on the shares UK-focused companies. 13/25

We don’t expect any major financial crisis to arise from no deal alone. The UK’s credit rating may be downgraded, but this is largely inconsequential. Long-term government interest rates may rise a bit, but again these would probably remain low by historical standards. 14/25

The most disruptive effects would likely be at UK-EU borders. Goods would be subject to checks, controls and tariffs, particularly animal and food products. Many more UK firms would need to make customs declarations, which they may not be prepared for, causing delays. 15/25

The most acute border effects on day one would be in the south-east. Estimates suggest capacity could be reduced by 40-60%. For time-sensitive goods, such as foods and medicines, this would be a serious issue. Around ¾ of medicines come from the EU, most via these routes. 16/25

Other major border issues would arise in NI. 1/3 of goods moving from NI to Ireland are food and animal products, which are subject to strict controls and tariffs. Overnight, NI businesses would face regulatory and tariff burdens their Irish counterparts would not. 17/25

In the medium term, the problems don’t disappear. We would start to see the impact on inflation, investment and overall economic output, possibly even precipitating a recession. Much depends on political developments and UK-EU relations in the immediate aftermath. 18/25

Again, the potential impact on NI is the worrying. Forecasts suggest damage to the agri-food sector may reduce NI exports south as much as a 1/5. The political impact of a sudden economic shock in border areas could be serious, especially alongside any form of direct rule. 19/25

We have our own modelling of the long-term economic impact of no deal, which you can find here (ukandeu.ac.uk/wp-content/upl…). The UK economy would be somewhere between 4% and 9% smaller than it would otherwise have been by 2030. This still means economic growth, but slower. 20/25

Largely, this is because the potential to substitute lost trade with the EU, owing to increased barriers, by signing trade agreements elsewhere is limited. When you add that to a likely fall in net migration, the economic effects are likely to be negative in the long run. 21/25

It’s worth dwelling on a few facts re NI here. Government analysis shows economic output could be 9% smaller than otherwise. Also, around half of NI firms operate on low margins or low sales growth. The NI economy department estimates 1 in every 20 jobs could be at risk. 22/25

There’s also some more granular analysis in the report of different issues and sectors, including citizens’ rights, good & manufacturing, healthcare, services (including financial services), food and internal security. 23/25

No deal would not be an end point. What would likely follow is further political instability, economic disruption and an intensification of already deep-riven divisions. That would mean uncertainty becoming a more or less permanent feature of our econ and political systems. 24/25

There's much more in the report than this, not least on some scary implications for policing and crime prevention caused by the end of our access to EU databases. so seriously, read it. Tweet about it. Give it to friends and family for their birthdays. You get the gist.... 25/25