Brexit Secretary admits Government has not assessed possible damage of 'no deal'

David Davis
David Davis
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Brexit secretary David Davis has come under fire after revealing the Government has not assessed the economic impact of crashing out of the EU without a new trade deal.

The admission by the Haltemprice and Howden MP came as he informed MPs that a default to WTO rules would see the introduction of hefty import tarrifs on agriculture and an end to financial passporting arrangements.

Defending his position, Mr Davis argued that he "did not need a piece of paper with a number on it" to be able to assess the likely outcome of the "no deal" scenario.

But Labour has accused the Government of "recklessness", following repeated assertions by Tory ministers that no new agreement with the EU "would be better than a bad one".

The comments by the Brexit Secretary came as the president of the European Commission Donald Tusk warned the he would not be "intimidated" by threats that refusing to agree a new deal with the UK would be damaging for the EU.

In a perceived response to the bullish rhetoric of some British politicians, the EU chief yesterday told the European Parliament that such a result "would be bad for everyone, but above all for the UK".

"I want to be clear that a 'no-deal scenario' would be bad for everyone, but above all for the UK, because it would leave a number of issues unresolved," he said.

"We will not be intimidated by threats, and I can assure you they simply will not work."

During an evidence session for the Brexit select committee later that day, Mr Davis was asked what the likely outcome would be if Britain is left without a new trade agreement and forced to revert to World Trade Organisation rules.

He replied that it would mean tariffs of 30-40% on agricultural exports, the loss of EHIC health insurance cards for travellers, and the loss of passporting rights for financial sector firms.

Mr Davis – who has previously briefed Cabinet colleagues to be ready for the “unlikely scenario” of the UK crashing out of the EU – went on to admit that no assessments of the economic impact of this scenario had been carried out since his appointment as Brexit Secretary.

Explaining Mrs May’s “no deal is better than a bad deal” mantra, he told MPs: “We had to be clear that we could actually manage this in such a way as to be better than a bad deal, and that is true.

“I can’t quantify it for you yet. I may well be able to do so in a year’s time. It’s not as frightening as some people think, but it’s not as simple as some people think.”

A Downing Street spokesman later stressed that “rigorous” work was taking place “across Government” to assess the various options and outcomes for Brexit.

However, responding to Mr Davis’ comments, Shadow Brexit Secretary Keir Starmer accused ministers of “recklessly talking up the idea of crashing out of the EU with no deal”.

"They have repeated the mantra that ‘no deal is better than a bad deal’. But we now know they have made no assessment of the economic impact of the Prime Minister failing to secure a deal,” he said.

“What’s clear, from the CBI and others, is that there is no result that would be worse for the British economy than leaving with no deal; no deal would be the worst possible deal.

“The Government should rule out this dangerous and counter-productive threat before Article 50 is triggered.”

Lib Dem select committee member Alistair Carmichael added: “It is appalling that this Government is days away from triggering Article 50, yet still hasn’t properly thought through the consequences of its reckless approach.

“It is the equivalent of driving towards a cliff-edge with a blindfold on... David Davis must come clean with the public about the impact a hard Brexit and tariffs would have on jobs, investment and living standards.”