No-deal Brexit Explained: The A to Z of What It Means

A sector-by-sector breakdown of what could happen if we leave the EU without a deal at the end of October. By Oliver Wright and Henry Zeffman

AEROSPACE
Worst case Although WTO rules mean there are no export tariffs, non-tariff barriers such as customs rules persuade manufacturers to relocate production to Europe, decimating UK aerospace, which employs 95,000 people and turns over £31 billion a year.

Best case A fall in sterling outweighs border trade friction and Britain’s aerospace manufacturers and component makers — BAE Systems, Rolls-Royce, GKN and others — continue to thrive.

Unknown factor Expertise, research and production is so entrenched in Britain that it is almost unthinkable that big global manufacturers would stop working with UK suppliers but no-deal could accelerate the move of the supply chain to China and southeast Asia.

AIRPORTS
Worst case The average of 25 seconds it takes for a British passport to be inspected by EU border forces increases by 90 seconds because of additional checks for third-party countries. This increases queues for both entry and exit with a knock-on effect on flight departures.

Best case These problems have been anticipated and border forces in most member states have the capacity to deal with extra checks, which are waived temporarily to allow smooth running.

Unknown factor Border checks are controlled not by the EU as a whole but by individual member states, so problems might not be uniform. Given the complicated schedules of most airlines, delays on one route could have a knock-on effect on many others.

AGRICULTURE
Worst case Food and agricultural products crossing between Britain and Europe are subject to veterinary and safety checks that lead to long delays at the border. Given that exports of food and drink to Europe are worth £13.2 billion a year, any disruption is devastating for British farmers, who face EU tariffs of more than 10 per cent on some products.

Best case Whitehall’s computer system to replace the one used by exporters is already running, making the transition smooth, and Brussels does not impose draconian checks in the short term.

Unknown factor Avoiding checks may not be sustainable in the medium term if regulations and standards diverge. Tariffs will distort the market unpredictably.

AUTOMOTIVE
Worst case Investment in British factories dries up. Production continues to fall from 1.7 million cars a year and restricted working weeks and closures prompt wide-scale redundancies among the 160,000 working in the supply chain. Nissan, Vauxhall and Mini pull back production to continental factories.

Best case Germany and France seek an accord with Britain, the EU’s second largest car retail market, for tariff-free, frictionless trade. The fall in the pound makes carmakers more competitive and premium and luxury producers flourish.

Unknown factor The end of uncertainty could kick-start investment but British carmakers could get caught up in trade wars between China and the US, their largest non-EU markets.

BANKS
Worst case Sterling collapses below parity with the dollar. To stop a panic sell-off, the Bank taps the government’s $135 billion currency reserves to prop up the pound. Even so, it settles somewhere near parity with the dollar, driving inflation above 5 per cent. Interest rates are raised, dealing some households a crippling blow.

Best case Sterling falls only 10 per cent to around $1.15, the FTSE 100 stock market bounces as a cheap pound improves overseas earnings, and rates are held at 0.75 per cent.

Unknown factor The market reaction is unpredictable. A rating downgrade could force a sell-off in commercial property or high-risk business loans, effects that spill over into the real economy and damage confidence.

BORDER SECURITY
Worst case Border Force is overwhelmed by long queues at air and maritime ports and is forced to relax checks, allowing organised criminal groups to intensify their operations, bringing in guns, drugs and illegal immigrants.

Best case Both sides temporarily agree to maintain existing checks as if Britain were still a member of the EU and informal co-operation and some intelligence-sharing continues. Contingency plans to cope with the new arrangements and avoid long queues are effective.

Unknown factor Border controls are not an EU competence so the 27 states could take different attitudes to how they respond to the changed circumstances. There are fears that some criminal groups have plans in place to capitalise.

CARE HOMES
Worst case Care homes and homecare services rapidly face staff shortages. Relatives take time off work, hugely disrupting the economy. About 410,000 people live in care homes while 875,000 rely on care at home. Some 8 per cent of the workforce is from the EU, rising to 39 per cent in London.

Best case Uncertainty makes unemployment patterns stabilise, pushing down turnover rates among carers. Charities and community groups provide extra help to elderly and vulnerable people at home.

Unknown factor Immigration rules are likely to allow recruitment for higher-earning jobs but the social care sector may lobby for exemptions for lower-paid staff if employers cannot fill vacancies. Will the government agree?

CITIZENS’ RIGHTS
Worst case EU citizens are only able to enter Britain for three months without applying for the right to remain from the Home Office. Other EU countries impose the same restrictions on British citizens, meaning those living on the continent are unable to move. Britain faces legal action under the Human Rights Act.

Best case Member states unilaterally follow Britain’s move and preserve the rights of UK citizens in their jurisdictions. Britain and the EU carve out the citizens’ rights package in the withdrawal agreement and agree it separately.

Unknown factor Unless the withdrawal agreement is agreed the rights of UK citizens in EU countries could change over time.

DATA
Worst case The legal basis for the huge daily transfer of data between Britain and the EU falls away, hitting online banking, e-commerce and thousands of businesses.

Best case Britain legally allows the EU to hold the data of UK citizens after Brexit. The EU reciprocates.

Unknown factor EU rules around personal data are policed by individual member states, which could interpret them differently.

DEFENCE
Worst case Britain is blocked from programmes financed by the European Defence Fund, which is to spend £11.6 billion from 2021-27 on military research and procurement. Britain is also unable to participate in EU operations. Cybersecurity co-operation becomes less certain.

Best case Britain continues to contribute to defence via Nato, the Organisation for Security and Co-operation in Europe and bilateral pacts with EU states.

Unknown factor Britain has been a willing contributor to EU military operations, deploying personnel on 25 of the past 35 missions. If the EU wants this to continue, it may be prepared to trade access to military technology programmes.

DISORDER
Worst case Food and medicine shortages prompt stockpiling, which causes looting before riots break out.

Best case Police, who have been training for looting in the event of a no-deal Brexit, quell any disorder swiftly and effectively.

Unknown factor Suppliers have been advised to ensure at least six weeks’ worth of reserves, but will this be enough?

DIVORCE BILL
Worst case The EU refuses to negotiate a long-term relationship until the £39 billion bill is settled. In practice this means the UK continues to pay membership fees until 2020 but not benefit from the transition arrangement.

Best case The EU’s approach turns out to be hardline posturing. It sees it as in its interest to normalise the relationship with Britain quickly and shows flexibility on the issue.

Unknown factor The divorce bill is as much about political symbolism as it is about the money. The hardline EU stance may make it harder for Brussels to back down.

THE ECONOMY
Worst case The economy moves into recession as inflation drives up the price of essentials. The chancellor calls an emergency budget, cuts VAT and announces measures such as corporation tax cuts and billions of pounds in loans to small businesses. The deficit soars.

Best case The economy recovers quickly as the cheaper pound attracts foreign capital. The chancellor limits his interventions to temporary VAT and corporate tax breaks.

Unknown factor The chancellor would have to devise new fiscal rules to regain the trust of markets after breaching his existing ones.

ENERGY
Worst case Electricity trading is disrupted as Britain leaves the internal energy market. It jeopardises power supplies in Northern Ireland, which is reliant on imports from the Republic. The pound crashes, pushing up the cost of energy and fuel imports.

Best case Political support on all sides allows contingency arrangements to resume normal service within hours of no-deal.

Unknown factor With many billions of pounds’ worth of new power plants needed in coming decades, will Britain still be able to attract foreign investment?

FINANCIAL SERVICES
Worst case There are no bridging agreements from the EU. Small problems in the financial markets, such as the failure of a bond issuance by a European country, have widespread ramifications owing to heightened anxiety.

Best case Brussels agrees measures that allow British banks, insurers and asset managers to operate in Europe, just as the Bank of England has done for European companies in the UK.

Unknown factor Britain and the EU have several agreements to keep areas such as international payments working. More are likely unless they become part of the political struggle.

FOOD
Worst case There is a shortage of some produce in shops as Britain heads into winter and tins and non-perishable goods are stockpiled. There are price rises as a result of new tariffs to protect farmers.

Best case Disruption is minimised as suppliers switch to UK producers to minimise the need for cross-Channel traffic. Shops keep shortages to a minimum, looking for products from outside the EU.

Unknown factor How we — the shoppers — respond. During the petrol crisis in 2000, shortages were made much worse by everyone filling up their tank

FREIGHT
Worst case Operators have to apply for an international road haulage permit for each vehicle and Britain’s quota is only 4,000. There is severe disruption to cross-Channel trade as at present about 38,000 UK-registered goods vehicles, carrying 20 million tonnes of freight a year, travel to the Continent.

Best case The European Commission agrees proposals to allow British road freight operators to continue to carry goods to and from the EU until the end of 2019.

Unknown factor Nobody knows what the long-term position of the EU will be.

IMMIGRATION
Worst case A surge of family members of EU migrants in Britain arrives to join them before the cut-off date of March 2022. Migrants wishing to stay for more than three months fail to apply for temporary leave to remain and stay illegally.

Best case EU citizens travel to the UK and register after three months enabling them to live, work and study for three years. At the end of three years they apply to stay under a new system planned for 2021.

Unknown factor How will immigration officials track down and remove illegal immigrants when they struggle to do so now?

MEDICINES
Worst case Medicine shortages worsen because of disruption at the border. Patients struggle to get their drugs, which leads to stockpiling, causing a vicious circle.

Best case Pharmaceutical companies have built stockpiles and leased refrigerated warehouses. The government has booked priority ferry lanes and chartered a plane to fly in stocks with a short shelf-life. Given that Britain exports more medicine to the Continent than vice versa, the EU keeps supplies flowing.

Unknown factor People have been urged not to stockpile drugs but, anecdotally, some are doing so.

MOBILE ROAMING
Worst case Mobile operators in EU countries are no longer bound by rules limiting how much they charge British operators for roaming services. Some Britons inadvertently rack up huge bills.

Best case Operators agree not to reintroduce roaming charges.

Unknown factor Even if British and foreign operators do all reach reciprocal agreements, it could take months or longer for the decision to be reached. It remains to be seen whether operators will absorb the higher costs in the meantime or pass them on to customers.

MOTORISTS
Worst case Anyone wanting to drive a car on the Continent has to apply for an international driving permit for £5. Drivers without them are turned back at EU ports and by car hire companies. Drivers also need a green card to ensure that they have valid insurance.

Best case The EU decides to waive the need for this documentation or not to make checks on UK vehicles. There is then an early reciprocal agreement on documentation.

Unknown factor Even if the EU does not carry out checks, a failure to have the correct paperwork could cause complications after an accident.

NHS
Worst case One in ten doctors and one in 14 nurses are from another EU country. After no-deal many decide to leave to avoid continued uncertainty over their status, which means hospitals struggle badly. Patient care is seriously threatened.

Best case Recruitment of overseas staff carries on as before as Britain continues to recognise their medical qualifications. Despite a dip in new arrivals in some areas, the Brexit vote has not prompted an exodus of EU staff and Britain continues to attract doctors and nurses.

Unknown factor While medicines have grabbed most of the attention, the NHS is reliant on importing everything from x-ray machines to syringes, spending £3.4 billion a year on medical devices from the EU. Problems could arise in any number of unexpected areas.

NORTHERN IRELAND
Worst case The Irish government sets up mobile checkpoints on its side of the border and impounds lorries that have not complied with new third-country EU regulations. Britain responds by setting up its own checkpoints, which become a target of dissident republican attacks.

Best case Both sides agree to work together to speedily implement arrangements to avoid the need for a hard border and in the interim agree not to impose any checks crossing the border. EU tariffs are waived for Northern Irish and Republic businesses engaged in cross-border trade for a limited period.

Unknown factor No one knows the effect the new border will have on the peace process. A new border could heighten the risk of sectarian crime in the province but others believe that the risk has been overstated.

POLICING
worst case The loss of criminal records checks and Schengen Information System II makes foreign criminals harder to identify and trace, meaning that dangerous offenders go free because background checks go from taking less than a week to 66 days.

Best case The government replicates EU systems in bilateral deals and persuades the member states to issue European arrest warrants for criminal suspects automatically.

Unknown factor The impact of the lack of intelligence and delays on criminal activities are unclear. There are also fears that it could lead to more foreign offenders viewing Britain as a soft target.

PROPERTY
Worst case Confidence in the fragile housing market collapses, triggering a downward cycle of price cuts and falling demand. Lenders react by asking for bigger deposits. If the economy enters a deep recession, prices slump.

Best case Pent-up demand props up the market. Sterling’s fall causes an influx of foreign money into the market, restoring confidence. The economy remains stable, supporting house prices.

Unknown factor The Bank of England has indicated that it could either lower or raise rates after no-deal, depending on how sterling reacts. A rate cut would support the market but if the cost of borrowing goes up prices could slump.

ROADS
Worst case Up to 16,000 lorries pass from Dover to Calais at peak times and, with long delays at ports, this has knock-on effects on nearby roads. It causes hospitals and other critical infrastructure to close.

Best case Strikes at French ports mean that the UK is well versed in dealing with a backlog of lorries under Operation Stack. Turning an old RAF base into a giant lorry park averts congestion.

Unknown factor Delays will be most likely if exporters do not have their paperwork — electronic or otherwise — ready at the border. Customs declarations will increase from two forms to nine for imports and exports. Much will depend on how well prepared businesses are.

REGULATORY STANDARDS
Worst case Without sufficient investment in enforcement bodies to ensure compliance with regulations, Britain becomes a priority destination for substandard, unsafe or counterfeit products.

Best case EU legislation on safety standards and consumer protection rights is mirrored in Britain. Customs officials and Trading Standards are given the resources required to police regulations.

Unknown factor The government may choose to abandon certain EU-level rules, such as energy efficiency testing and labelling standards, which critics say favour German companies.

SHOP PRICES
Worst case New tariffs increase the cost of certain goods sharply. Imported cars are subject to some of the biggest increases, at an average of £1,500. Custom checks at British ports are managed badly and the supply of some imports are delayed, resulting in fewer goods in the shops and price rises.

Best case The proportion of items eligible for zero-tariff access to Britain rises from 80 per cent to 87 per cent so the price of some items, including many clothes, falls. If customs checks at ports are managed well, shoppers should see no difference in the supply of their favourite goods.

Unknown factor How foreign exchange markets react. Sterling would be expected to fall, pushing up the cost of imports, forcing retail prices higher. However, the extent of the pound’s decline and whether and how long it would take to recover is unknown.

TRADE DEALS
Worst case A failure to replicate certain agreements means British exporters endure higher tariffs and trade barriers in some markets, putting them at a significant disadvantage to European rivals.

Best case Whitehall officials manage to replicate a large number of the EU’s 40 or so free state agreements with 70 nations.

Unknown factor Britain would immediately assume full control of an independent trade policy for the first time in four decades. It is unclear how long any negotiations with countries like the US would take. The capability and capacity of Britain’s fledgling negotiating operation has also yet to be tested.

TRAVEL INSURANCE
Worst case British travellers lose their rights under the European health insurance card, which covers medical expenses in the EU. They have to pay for the full cost of treatment, which could run into tens of thousands. Travel insurance premiums rise sharply.

Best case Britain allows EU citizens to use the card and the EU reciprocates. The financial burden on insurers remains largely unchanged so the cost of policies does not change drastically.

Unknown factor Exactly how much treatment costs in each country. One insurer has estimated that medical bills for uninsured travellers could rise by as much as 900 per cent. About ten million Britons holidayed abroad without adequate insurance in 2017.

UNIVERSITIES
Worst case EU students are put off by rising fees. Non-EU students are deterred by the impact of Brexit on the reputation of British universities, which costs them billions of pounds worth of income in coming years.

Best case Any drop-off in the number of EU students, who pay the same tuition fees as domestic students, is offset by an increase in those from outside the EU, whose fees are higher. Most academics from EU countries are granted the right to remain and choose to.

Unknown factor The continued mutual recognition of professional qualifications would be uncertain, along with the mobility of citizens and access to EU programmes.