(MENAFN- Daily Forex) The rhetoric of the British PM ever since the A50 notice period was triggered has been 'no deal is better than a bad deal. As soundbites go, it is a good one if your sympathies lie on the leaver side. Remainers have always retorted that any deal will be worse that the situation the UK finds itself in now as a full member of the world's largest and most successful trading bloc; by definition.
It remains the government's position that it is seeking a deep, special, bespoke and (probably) unique relationship with the EU which will (somehow) allow it to enjoy (near) frictionless trading of goods and services and enjoy an a la carte selection of a smorgasbord of EU institutions and agencies. The EU has steadfastly stated that this scenario simply cannot happen, but until pragmatism breaks out, it remains on Mrs May's Christmas wish list.
Being a member of the single market and customs union is not simply about enjoying tariff-free trade across all 28 states of the EU. It allows items made in one (or several) EU state to be recognised as being of EU origin across the bloc; uniformity of regulations and standards means that foodstuffs and livestock can be transported as freely across the bloc as they are within a country these conditions will cease to apply in a 'no deal scenario on 30/3/19.
Oliver Wyman, a global consultancy firm, has evaluated the worst-case scenario for Brexit (no deal) and estimates that loss of frictionless trade and the imposition of barriers to trade will set back the average UK home by £1000 a year in higher prices for EU-supplied goods. The total hit to the UK economy is estimated at £27 billion. The report warns that profit margins for supermarkets and restaurants could be severely cut by disruption to supply and distribution chains. Businesses would have no option but to pass these costs on to their customers should they want to stay trading.
The report argues that under the most benign deal where tariffs are avoided and regulatory barriers are kept as free as possible, administrative costs will rise (so much for the Brexiter's pledge of a bonfire of red tape). It estimates the hit at £250 per household annually and a cost to the economy of £6.8 billion.
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