A no-deal (WTO) Brexit would be a disaster for the UK according to many in the markets and media. While it is possible that fears are overdone, leaving without a deal is likely to complicate things going forward compared to leaving with an agreement in place. One example would be the negotiation of a free trade agreement. As a ‘third country’ (post a WTO Brexit) the UK would need all 27 EU countries to separately ratify the deal. However, if a withdrawal deal were in place, negotiations would be conducted with the EU 27 as a bloc.
Despite the somewhat gloomy outlook, let’s remember that the UK will continue as a well-educated, advanced, service-driven economy with a flexible labour market. In education and medical services, the UK’s customers are predominantly from India, China, the Middle East and Africa, while its competitors in education are the US, Australia and Canada. We can include accounting and insurance in this as well.
While the macroeconomic implications of Brexit on the UK are significant, the political impact could be even more profound and long lasting. One notable side-effect is that another referendum on Scottish independence will be more likely.
It could also have consequences for Northern Ireland, where opinion polls show a closing of the gap between those in favour of unification with the Republic of Ireland and in favour of remaining in the United Kingdom.