“We could be headed for a ‘chaotic Brexit,’ which is no deal at all—no deal on the terms of our withdrawal, let alone the future relationship,” he said, noting that such a scenario would have damaging consequences, such as undermining the economic and political stability of Northern Ireland, as well as leaving EU citizens in the U.K. and British citizens in the EU in legal limbo. Though such an outcome is in neither party’s interest, Portes said the U.K. would have more to lose than the EU if it occurred. “The issues are pretty much the same, it’s just the magnitude that’s different because we’re a much smaller market for them in size terms than they are for us.”
This hasn’t been the negotiating posture of British Prime Minister Theresa May, who declared in January that “no deal is better than a bad deal.” But the threat appears to have fallen on deaf ears in Brussels, in part because EU negotiators know exactly what would happen if no deal is reached, particularly on trade. As noted by John Springford and Simon Tilford of the Center for European Reform, a cliff edge scenario—in which the U.K. would leave the EU (including its single market and customs union) without a trade deal or transition period—would make the 40 percent of overall U.K. exports that go to the EU subject to automatic tariffs and customs barriers. This, in turn, could cause the attractiveness of the U.K. as a place for investment to rapidly decline and prompt a further drop in the pound, which has lost more than 13 percent of its value against the dollar since the U.K.’s referendum to leave the EU took place. [...]
But fruitful discussions are a far cry from actual agreement. With only two rounds of talks remaining before October’s EU summit (during which it will be decided if talks can proceed to trade), the likelihood of reaching agreement on all three major divorce issues before next month’s projected deadline is slim. “I still think the most likely thing is that there will be … [a] deal, but it’s not going to happen by October,” Portes said. “The longer this drags on, the less time you have to talk about anything else.”
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