No-deal Brexit: how likely is it that the UK will leave the EU without a trade deal - and the Internal Market Bill explained

The UK could be leaving the single market and customs union without a trade deal on December 31

Friday, 11th September 2020, 4:42 pm
The UK could leave the single market and customs union without a trade deal in place (Getty Images)

On January 31 this year the UK left the EU – Boris Johnson had delivered his election promise to take the United Kingdom out of the European Union.

But that wasn’t the end of the process.

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The UK doesn’t officially leave the European Union until the end of 2020 and this week the process of settling the divorce from the European Union hit a major stumbling block.

The UK government brought forward a bill to rewrite parts of the legislation it signed in January which sealed the country’s exit from the political and economic union.

The proposal of a tweak to the agreement has caused something of a diplomatic incident, with the European Union threatening legal action, saying that the UK had “seriously damaged trust” between the two parties.

Questions have also been raised over the legality of the move, with claims that it breaks international law.

The breakdown of talks could lead to a no-deal Brexit of sorts.

How is a no-deal still possible?

While the UK and the EU have agreed to the Brexit Withdrawal Agreement, talks over a trade deal are ongoing with everything from trade and immigration to security and access to fishing waters being discussed.

With the UK government contemplating tweaks to the original agreement, the EU has threatened to walk away from talks altogether.

The Withdrawal Agreement stipulated that the UK would be completely removed from the European Union by the end of 2020, meaning that the country faces entering 2021 with no trade deal in place.

A no-deal originally meant that the UK would simply leave the union with no Withdrawal Agreement, but now the UK risks leaving the EU without a trade deal.

The Withdrawal Agreement would still be active, however, meaning that agreements over the Irish border would still be settled following a departure.

What does the UK want to adjust?

When the Brexit transition period ends on December 31, the UK Government and the devolved administrations in Scotland, Wales and Northern Ireland will no longer be bound by EU law.

The Prime Minister signed the Withdrawal Agreement with the EU that paved the way for the UK’s formal departure and contained safety nets if the two sides could not broker a trade deal.

Mr Johnson loved to brag this Brexit divorce deal was “oven ready” during the election campaign, but now he effectively says the recipe was not up to scratch.

Downing Street says there are “ambiguities” and a “lack of clarity” in key areas of the arrangement, which it argues was “agreed at pace”.

What’s the Internal Market Bill?

The Internal Market Bill introduced in the Commons aims to allow goods and services to freely flow between the four nations.

And Mr Johnson argued it would be a “legal safety net” to protect the peace process in Northern Ireland against “extreme or irrational interpretations” of the Northern Ireland provisions which could lead to “a border down the Irish Sea”.

The bill proposes no new checks on goods moving from Northern Ireland to Great Britain to allow for “unfettered access” to the rest of the UK.

It also proposes powers for UK ministers to “disapply” rules relating to movement of goods in the absence of a trade deal, including any under the Northern Ireland Protocol of the Withdrawal Agreement.

Some of the measures would not be compatible with international law.

Why is the EU upset?

Senior EU figures are furious about the proposal, which Northern Ireland Secretary Brandon Lewis admitted would break international law in a “specific and limited way”.

European Commission president Ursula von der Leyen said she was “very concerned”, saying it would “undermine trust”, and called for Mr Johnson to honour his past commitments.

Irish Taoiseach Micheal Martin called Mr Johnson to tell him, in “forthright terms”, his concerns, including “the breach of an international treaty, the absence of bilateral engagement and the serious implications for Northern Ireland”.

And there are real worries that the proposal will derail the already deadlocked trade deal negotiations.

Commission vice president Maros Sefcovic is seeking clarity from Cabinet Office minister Michael Gove in an “extraordinary meeting” of the Joint Committee between the UK and EU in London.

Are talks over?

Not quite.

Despite the threat of legal action, Number 10 is insisting that a free trade deal between the two parties is still possible.

The Prime Minister’s official spokesman however reiterated the Government’s position that the provisions in the UK Internal Market Bill remained “critical” to the preservation of the Northern Ireland peace process.

He said the UK would continue to strive for an agreement and called on the EU side to show greater “realism”.

“We have engaged constructively with the EU throughout this process. We have negotiated in good faith and we will continue to do so,” the spokesman said.

“We do still believe that there is a deal to be reached. We will work hard to achieve it.

“What we have been asking for is for more realism on the EU side about what it means for the UK to have left the EU and to once again be a sovereign nation.”

The EU on the other hand is digging its heels and insisting that no significant talks will take place until the bill is pulled from parliament.

What would a no-deal Brexit look like?

On December 31 2020 the UK will drop out of the European Union’s single market and customs union.

If the UK enters 2021 without a trade deal then tariffs and border checks could be applied on goods travelling in both directions.

Tariffs could see a rise in the price of UK goods while also making them more difficult to sell in the EU.

A no deal could also result in the UK service industry missing out on access to the European market.

No deal could also see issues arise relating to a multitude of issues such as immigration and security.