David Davis: ‘It’s not as frightening as some people think but not as simple as some people think’
David Davis: ‘It’s not as frightening as some people think but not as simple as some people think’ © PA

David Davis, the Brexit secretary, has said the UK government has not made a thorough assessment of the economic impact of leaving the EU without a deal.

Speaking before MPs on the Commons Brexit committee on Wednesday, Mr Davis also said British businesses would face tariffs and non-tariff barriers if no deal could be agreed.

Legislation to allow Theresa May, prime minister, to start the Brexit process will gain royal assent on Thursday, paving the way for her to activate the Article 50 exit clause at the end of March.

Mrs May has said that “no deal is better than a bad deal”, while Boris Johnson, foreign secretary, has said such an outcome would be “perfectly OK”.

Mr Davis said on Wednesday: “It’s not as frightening as some people think but not as simple as some people think.”

Asked about Mr Johnson’s comment, Mr Davis said he “dealt in fact” and disparaged “throwaway lines in interviews”.

He confirmed that not reaching a Brexit deal would leave carmakers facing 10 per cent tariffs, while dairy and meat producers would be hit with tariffs of between 30 and 40 per cent on exports to the EU.

Financial services companies would lose their “passports” to operate across the bloc, Britain would exit the EU/US open skies aviation deal and customs checks would take place at the Northern Ireland border, he said.

But Mr Davis said the UK government had not assessed the economic impact of such an outcome “to my satisfaction” since last year’s referendum.

He argued that much depended on what mitigating measures the UK would take to offset a “no deal Brexit”, and insisted he would seek a comprehensive free-trade deal with the EU.

He said the default position for Brexit if there was no deal was that the UK would trade with the EU on “most favoured nation status under World Trade Organisation arrangements”.

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”.

Alistair Carmichael, the Liberal Democrat MP and a member of the Brexit committee, said: “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. David Davis must come clean with the public about the impact a hard Brexit and tariffs would have on jobs, investment and living standards.”

Mr Davis’s comments came as Donald Tusk, the president of the European Council, rejected suggestions that the EU would be worse off than the UK without a renewed deal after Brexit.

The former Polish prime minister, who was re-elected as president of the council by a 27-1 margin last week, said on Wednesday that the bloc “will not be intimidated by threats that no Brexit deal is good for the UK and bad for the EU”, and told the European Parliament that the UK’s threats “simply will not work”.

“The claims increasingly taking the form of threats that no agreement will be good for the UK and bad for the EU need to be addressed,” he said. “A no deal scenario would be bad for everyone, but above all for the UK because it would leave a number of issues unresolved.”

Mr Tusk’s remarks echoed those of policymakers at the European Central Bank, who have insisted that Brexit will be more damaging for the City of London than the continent.

Liam Fox, the UK’s international trade secretary, said on Sunday that failure to reach an agreement would be “bad” for the country.

Letter in response to this article:

Brexit secretary should work with Treasury / From Stuart Fowler, London, UK

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