About a fifth of British companies are ready for a no-deal Brexit according to the Bank of England’s research, said Martin Beck, a senior economist in Oxford Economics.
“And about three-quarters feel they are as ready as possible, they have done what they could,” he told Anadolu Agency.
The U.K. makes several preparations to minimize disruption to the imports from the EU, Beck stressed.
For 12 months, the U.K. government would reduce tariffs on imports from countries currently trading on WTO (World Trade Organization) terms, while it planned to impose tariffs on some imports from the EU countries, he noted.
Some 18% of imports from the EU will be subject to tariffs — up from 0% now — and overall, 87% of the U.K. imports from all sources will be subject to zero tariffs compared to 82% at present, he added.
“The UK has also committed, again on a time-limited basis, to continue to recognize most EU standards for goods to ease their transit into the UK and has said that, aside from high-risk food products, it will allow EU-approved agricultural products into the UK with no additional controls or checks, irrespective of whether the EU reciprocates,” he highlighted.
The real problem is exports
Saying that the real problem was more about the British firms’ exports to the EU, Beck stressed that the U.K. will be treated as a third country in the event of a no-deal Brexit.
As a result, the U.K. exports will be subject to EU tariffs, paperwork and checks flowing from customs requirements, he asserted.
“An agreement between the UK and France means that lorries arriving at Dover bound for the Continent will only be allowed on ferries if they carry the correct documentation”, he said.
“Those documents will then be processed onboard, leaving trucks carrying non-food products to leave French ports without the need for checks,” Beck added.
Brexit process can be extended
He also said a further extension to the Brexit deadline beyond the current Oct. 31 deadline is the most likely outcome.
“However, given it would just push the risk of no-deal back three months, it probably wouldn’t have much effect on the economy,” he said.
Beck stressed that the real issue is the result of an early general election, which will very likely be held in November or December 2019.
“A Conservative victory would raise the odds of no-deal, while a Labour victory would raise the odds of another referendum and the U.K. not leaving the EU at all,” he highlighted.
He also said the British economy will grow around 1% in 2019 and 2020 if the U.K. will assume a deal, but the economy will stagnate next year under the no-deal Brexit.
Food, beverage prices to rise
A prominent private lender in the country, Barclays, stimulated that a no-deal Brexit would cause tax raises on food and beverage products up to 27%.
Last year, the U.K.’s food and beverage imports were around £48 billion ($64.3 billion), which were mostly from the EU countries.
No-deal Brexit’s cost on food and beverage retail trade sector can reach £9.3 billion ($11.6 billion) annually.
The EU’s share in the U.K.’s exports is around 44% — or £274 billion ($367.2 billion) — while the U.K.’s imports from the EU reached £341 billion ($456.9 billion) last year.
In the event of Brexit without a deal, the U.K. should continue to trade on WTO terms, which causes raising customs tariffs on some goods in international trade among the U.K., the EU, and third countries.
The U.K will not just lose its right to free access to the European Single Market, it will also lose its market access to third countries, which signed free trade agreements with the EU.