No assessment of the economic implications of leaving the EU without a trade deal has been undertaken by the Government since last year’s referendum, Brexit Secretary David Davis has said.
Mr Davis confirmed that leaving under World Trade Organisation rules would mean tariffs of 30-40% on agricultural exports and 10% on cars, the loss of EHIC health insurance cards for travellers and passporting rights for financial sector firms, as well as departure from the EU-US Open Skies arrangements for air transport.
But he said it will be possible to devise mitigating action in response to these issues, and it would be “otiose” to estimate their economic impact until that work has been done.
He told the House of Commons Exiting the EU Committee that he expected to be able to provide forecasts in about a year’s time.
His comments came as the European Council president Donald Tusk said that Europe will not be “intimidated” by British threats to walk away from trade talks if it cannot get a good deal.
In a statement to the European Parliament, Mr Tusk dismissed suggestions that a failure to reach agreement in Brexit talks would be worse for the EU than for Britain, telling MEPs: “A ‘no-deal scenario’ would be bad for everyone, but above all for the UK.”
Mr Davis has briefed Cabinet colleagues to be ready for the “unlikely scenario” of the UK crashing out of the EU without a deal - a prospect which Foreign Secretary Boris Johnson said this weekend would be “perfectly OK”.
Prime Minister Theresa May has made clear that she regards no deal with the EU as being better than a bad deal.
Asked whether he thought leaving without a deal would be bad for the UK, Mr Davis told the committee: “I think it is not as good an outcome as a free trade, friction-free, open agreement, which is why we are trying for that.”
Confirming that no assessments of the economic impact of failure to reach a deal had been carried out since his appointment as Brexit Secretary, Mr Davis told the committee’s chair Hilary Benn: “Any forecast you make depends on the mitigation you make, and therefore it would be rather otiose to do that forecast before we have concluded what mitigation is possible.”