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The British government has not carried out any assessment of the economic impact of exiting the EU without reaching a new deal since the Brexit vote, the Brexit secretary has said.

Asked whether the government has evaluated the “implications for the British economy and British businesses of there being no deal”, David Davis told a parliamentary select committee:

It made an estimate during the referendum campaign but I think one of the issues that has arisen is that those forecasts don’t appear to have exactly been very robust since then.

If you mean under my time, no.

The prime minister has maintained that “no deal is better than a bad deal” as the government prepares to begin formal Brexit negotiations next month, but faces strong opposition from MPs including some within her Conservative party.

Mr Davis told the Commons Brexit committee on Wednesday:

It’s not as frightening as some people think but not as simple as some people think.

Mr Davis said the default assumption for Britain if it leaves without a deal is that it would trade with the EU under “most favoured nation” status under World Trade Organisation arrangements. That would subject British businesses to tariffs and non-tariff barriers including a 10 per cent tariff for car exports and 30 to 40 per cent tariffs for dairy and meat producers.

Financial services companies would lose “passporting” rights allowing them to operate across the EU, Britain would fall out of the EU/US open skies aviation deal, and customs checks would take place at the Northern Ireland border, he said.

Mr Davis said the government had not assessed the impact of such an outcome “to my satisfaction”, but he said the impact would depend on what mitigating measures Britain takes, and emphasised that the government will aim for a comprehensive free trade deal with the EU.

He admitted that leaving without a deal would be “not as good an outcome” as a free trade deal. Asked about Boris Johnson’s recent comment that leaving without a deal would be “perfectly okay”, Mr Davis said he “dealt in fact” and disparaged “throwaway lines in interviews”.

Challenged again on the lack of a detailed impact assessment of leaving the EU with no deal, Mr Davis said that in his former business career he “knew what would be a good deal even if you didn’t have a number”.

Meanwhile Mr Davis sounded a dovish note on future controls on EU migration, saying: “The aim is to bring down net migration numbers but it won’t be done in a way that damages the economy.”

He also said there had been “a progressive warming of tone” in the EU towards striking a deal that maintained open access for European business to the capital markets of the City of London.

(Pic: PA.)

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