In the graphic below we set out two types of no deal.
One is what the Chancellor Philip Hammond termed a “bad-tempered” no deal which results from a breakdown of talks. The UK would immediately become a third country in dealings with the European Union (EU). It would move to trading with the EU on World Trade Organization (WTO) terms with no preferential tariff agreement. There would be no transitional period and potentially no other agreements with the EU on issues such as data sharing, aviation or customs co-operation.
The likelihood of disruption to business as usual would be very high. There would probably be no withdrawal agreement. UK contributions to the EU budget would end and the EU 27 member states would have to decide how to pursue outstanding obligations. It would be up to the UK and the EU 27 member states to decide how to deal with existing residents from the other jurisdictions. Finally, it would be difficult to avoid anything other than a hard border with Northern Ireland.
A possible alternative scenario would be what we have dubbed an amicable no deal. In this case, the EU 27 member states and the UK agree that they will not be able to conclude a Free Trade Agreement (FTA) – and move to trade on WTO terms.
But both agree to put in place the sort of agreements the EU already has with other major trading partners to ease (but not eliminate) the newly introduced barriers to trade. There could even be agreement to a short standstill transition, along the lines the Prime Minister set out in her Florence speech, to allow both the UK and EU to be ready for Brexit. One precondition for this would likely be the conclusion of a withdrawal agreement.
Another scenario envisages a delayed deal, with both sides agreeing they need more time when we reach 29 March 2019.
Our final scenario is that negotiations conclude successfully and the Government achieves its objective of having a deal in place before the end of the Article 50 period, with an agreed “implementation phase”.
But of course, other scenarios are possible.