‘Difficult to envisage a worse outcome for UK' than ‘no deal' Brexit – Lords EU Committee

The Committee describes the Government's assertion that ‘no deal is better than a bad deal' as ‘not helpful', and says it is ‘difficult, if not impossible, to envisage a worse outcome for the UK'. The report makes clear that ‘no deal' would not only be economically damaging, but would bring an abrupt end to cooperation between the UK and EU on issues such as counter terrorism, police and security and nuclear safeguards. It would also necessitate the imposition of controls at the Irish land border.

The Committee identifies shortage of time, the ‘ticking clock' of the Article 50 deadline, as the greatest risk factor that could lead to a ‘no deal' outcome. The Committee agrees with the Government that concluding all aspects of the negotiations before March 2019 would be the best outcome, but notes that the overwhelming weight of evidence suggests that this will be impossible. The Committee concludes that enshrining the Article 50 deadline of 29 March 2019 in domestic law would ‘not be in the national interest'.

The Committee also questions the feasibility of a ‘bare bones' deal, as described by the Secretary of State for Exiting the EU, in the event that a full agreement is not achieved, and agrees with the Confederation of British Industry that it would in any case be a ‘very bad deal'.

The Committee questions whether a legally binding transition deal can be reached in time to prevent damage to the UK economy. The Committee suggests that negotiations could last several years, and that a ‘standstill' transition period may therefore be needed to buy time for negotiations to continue beyond March 2019.

The Committee notes that the only secure legal basis for transition may be to use one of the two options available under Article 50, either to extend UK membership of the EU for a time limited period, or to set a date later than March 2019 for withdrawal to take effect, and calls on the Government to review these options.

Commenting on the report, Lord Jay of Ewelme, acting Chairman of the House of Lords EU Committee, said:

“The overwhelming weight of evidence suggests that ‘no deal' would be the worst possible outcome for the UK, in terms of the economy, security, the environment and citizens' rights.

“The biggest risk factor that might lead to a no deal outcome is time – the clock is ticking. While we support David Davis' ambition to secure a comprehensive agreement by 29 March 2019, almost nobody outside the Government thinks this will be possible. The negotiations may need to continue beyond that point, and enshrining the deadline in domestic law would not be in the national interest.

“Both sides agree that we will need a transition period, to give confidence to businesses and potentially to buy time to complete the negotiations. But the Government hasn't yet explained how transition will work, or what its basis will be in EU law. The evidence is clear that in legal terms the most secure way to buy time is to use one of the options that exist within Article 50 for a time-limited extension of the UK's EU membership.

“We will live with the consequences of Brexit for decades to come, so we need to get it right. If buying a bit more time means that we get a better outcome, which benefits businesses and citizens on both sides, a short extension of EU membership may be a price worth paying. This is not about unpicking Brexit, but about delivering the best Brexit possible.”