It comes after Theresa May faced another embarrassing defeat on her Brexit deal on Tuesday night. MPs voted against it, in a second meaningful vote, with a majority of 149.
The Prime Minister always said she would give MPs the choice between delaying Brexit or leaving the EU with no deal if her plan is rejected in the Commons vote.
Conservative MPs will be given a free vote on whether they are willing for the UK to leave the EU without a deal at the end of the month.
If MPs reject no deal, they will vote on whether to authorise Mrs May to request an extension of the two-year Article 50 negotiation process.
The Government’s stance has always been that it wants to avoid a no deal. But with a draft deal that has been incredibly divisive, resulting in resignations and strong take-downs from across the political parties, ministers have been preparing for leaving the EU without any deal whatsoever. Political differences on the terms of leaving have been rife for months and hardcore Brexiteers in Conservative ranks have repeatedly said a no-deal Brexit would be better than a soft Brexit.
What is a ‘no deal’ Brexit?
A “no deal” Brexit does what it says on the tin. It means the UK and the EU has been unable to reach a withdrawal agreement.
If this is the case, it means there will be no 21-month transition period. Consequently consumers, businesses and public bodies would have to respond immediately to changes as result of leaving the EU.
“On 29 March next year, the UK would leave the EU and everything associated with that would come to an end,” according to Dr Simon Usherwood, a reader in politics at the University of Surrey.
“[A no deal] doesn’t stop the UK leaving but it means there is absolutely no clarity about what happens.”
While it is a possibility, in reality neither the UK nor the EU would favour a no deal because it signals a poor political relationship, he adds.
One of the key issues with a no deal scenario is the uncertainty it would lead to for life and work in Britain.
So what would actually happen with no deal?
These are just some of the consequences:
The UK would revert to World Trade Organisation rules on trade. While Britain would no longer be bound by EU rules, it would have to face the EU’s external tariffs.
The price of goods in shops for Britons could go up as businesses would have to place tariffs on goods imported from the EU. Some British-made products may be rejected by the EU as new authorisation and certification might be required.
Manufacturers could move their operations to the EU to avoid delays in components coming across the border.
The UK would be free to set its own controls on immigration by EU nationals and the bloc could do the same for Britons. There could be long delays at borders if passport and customs checks are heightened. The fate of expats – there are 1.3 million Britons in EU countries and 3.7 million Europeans in Britain – in terms of their rights to live and work would be unclear.
Professionals working in the EU might find their qualifications are no longer recognised, meaning they are no longer able to practice. Flights to the EU could be grounded as the necessary safety confirmations to cover both ends of the journey might not be in place.
Relevant EU laws would be transferred over so there would be no black holes in Britain’s lawbook.
Britain would no longer have to adhere to the rulings of the European Court of Justice but it would be bound to the European Court of Human Rights, a non-EU body.
The Government would not have to pay the annual £13 billion contribution to the EU budget. However Britain would lose out on some EU subsidies – the Common Agricultural Policy gives £3 billion to farmers. The Irish border The issue of the border between Northern Ireland and the Republic would remain unresolved. While physical infrastructure has been vetoed, the border would become an external frontier for the EU in the event of a no deal Brexit. There would be pressure to enforce customs and immigration controls.
But Britain would be able to broker trade agreements with other countries?
The current deal on the table would allow Britain to start trade negotiations with other countries after 29 March 2019 but any deals would not be implemented until after the transition period of 21 months. With a no deal, Britain could implement the deals whenever the fine print is ready. But deals take years, not months or weeks, to broker.
Therefore the UK is not gaining anything by having no transition period in this instance. “It’s worth making the point that trade deals are about agreements with states.
If the UK left without a deal showing it was unable to have constructive conversations with close trading partners [the EU], it would not be a great incentive for third parties,” says Dr Usherwood.
How likely is a ‘no deal’ Brexit?
There was a long-standing impasse between Britain and the EU over certain key Brexit issues, which made a no deal very likely. Mrs May’s initial Chequers plan – which split the Tory Party – was dismissed by EU leaders, who said it “will not work”.
In response, the Prime Minister insisted the EU brings fresh proposals for the Irish border and trade to the table. Then after months of negotiations, Mrs May announced she had brokered a draft deal that offered a future relationship with “a breadth and depth of co-operation beyond anything the EU has agreed with any other country”.
“We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated,” she said.
However the proposed deal was widely criticised across the parties.
Although the Government has been ramping up preparations for a no deal, Downing Street has always said the “top priority” was to deliver Brexit under the terms of the deal struck by Mrs May with Brussels.
Mrs May’s proposed Brexit deal has been rejected by Parliament twice now, leaving MPs to decide whether they want a no deal outcome instead. However commentators expect MPs to vote down a no-deal Brexit, too. This leaves open the possibility of extending Article 50.
When asked about the likelihood of a no-deal Brexit, politics professor Tim Bale says: “Almost every conceivable outcome seems just as likely as unlikely! But – best guess – a no-deal Brexit, even though on paper it’s the default outcome seems the most unlikely since around seven or eight out of 10 MPs object to it and the Prime Minister is probably (and many of her Ministers are certainly) opposed to ‘crashing out’ too.
“The short-term disruption would be somewhere between significant and immense – and for no very easily-achievable gain even in the long term,” adds Prof Bale, of Queen Mary, University of London.
This story first featured on our sister site the i.