British Prime Minister Theresa May yesterday refused to rule out Britain leaving the EU without a deal, after the Bank of England warned that such a scenario could plunge the nation into its deepest recession in decades.
The UK’s parliament is due to vote on the divorce deal May’s government has struck with the EU on Dec. 11, and lawmakers from all sides are vowing to reject it.
May was asked by a committee of lawmakers whether she would act to stop a no-deal Brexit if parliament throws out the agreement.
“If the House [of Commons] were to vote down the deal that has been agreed,” there would have to be “some practical steps in relation to no deal,” she said.
“Obviously, decisions would have to be taken,” she added.
The Bank of England on Wednesday said that in a worst-case no-deal scenario, Britain’s economy would shrink 8 percent within months as unemployment and inflation soars and the value of the British pound plunges.
Bank of England Governor Mark Carney yesterday said that most British businesses were not prepared for a no-deal Brexit.
“Less than half of businesses have initiated” contingency plans to protect operations in the event Britain leaves the bloc without an agreement on future trading relations, Carney told the BBC.
“All the industries, all the infrastructure of the country, are they all ready at this point in time? As far as we can tell, the answer is no,” he said.
Separate analysis by government economists said that Britain would be poorer after Brexit than if it had stayed in the EU, no matter what sort of trade deal it secures with the bloc.
The assessment said the closest trade relationship would produce the least economic damage.
The deal between Britain and the EU lays out in detail the terms of Britain’s departure on March 29, but leaves many details of the future relationship to be negotiated during a 21-month transition period.
The EU says that Britain would have to follow many of the bloc’s rules and regulations if it wants full access to its markets — something pro-Brexit British politicians find hard to swallow.
May told lawmakers that Britain would be aiming to achieve “frictionless trade” with the bloc, but “there are those in the European Union who have yet to be persuaded of that argument.”
European Chief Negotiator for the UK Exiting the EU Michel Barnier said the withdrawal accord, struck between Britain and the bloc this month after a year and a half of negotiations, “is the only possible deal.”
“Given the ... high degree of complexity of all the issues surrounding the UK’s withdrawal, the orderly withdrawal treaty that is on the table is the only deal possible,” Barnier said. “This is now the moment of ratification.”
Briefing the European Parliament, he said that despite the deal, “a long and winding road” lay ahead before Britain’s departure.
“We are not at the end of the process,” Barnier said. “The road ahead is long, and it is up and down.”
Additional reporting by Reuters
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