MPs are getting worried about the economic impact of leaving the EU with no trade deal

Deal Or No DealChannel 4‘Deal Or No Deal’

LONDON — MPs urged the government to calculate the potential damage to the economy arising from leaving the European Union without a trade deal.

Members on the committee for exiting the EU warned that Prime Minister Theresa May’s claim that “no deal was better than a bad deal” was “unsubstantiated.”

“The government should conduct a thorough assessment of the economic, legal and other implications of leaving the EU without a deal in place,” Hilary Benn, chairman of the committee, said in a statement.

May started the two-year Brexit negotiation process underway last week when she triggered Article 50 of the Lisbon Treaty. Already the rhetoric has become heated, sparking rows over the future of Gibraltar and whether the UK should pay €60 billion (£51.6 billion) to settle accounts upon leaving.

In a response published last week, EU Commission President Donald Tusk stated that the Union wants these issues to be dealt with before talks can begin over a new free trade arrangement, highlighting the possibility that no trade deal will be agreed by the 2019 deadline. Around half of the UK’s imports come from the 27-nation single market trading bloc.

Leaving without a deal would subject UK exporters to World Trade Organisation rules, which “would mean not just a return to tariffs, but the reappearance of non-tariff barriers,” said Benn.

“That would mean more paperwork, border checks and bureaucratic requirements for British companies trading with the EU. For many businesses these can be far more costly than the actual tariff itself,” he said.

The committee urged the government to secure a special deal for services such as finance and law early on in the talks because of their importance to the economy.

“Negotiating a good deal on trade in services must be a priority given that it accounts for 42% of the UK’s exports to the EU,” the committee said.

“Financial and professional services will require time to adjust to any new trading arrangements and we should seek to agree a phased process of implementation for the sector early in the negotiations to provide certainty for businesses in preparing for Brexit,” it said.

Whatever deal the UK government gets in negotiations may be a hard sell to voters.

Polling expert John Curtice showed on Monday that the British public wants May to deliver both a free trade agreement and restrictions on immigration — a combination that the EU has shot down on multiple occasions.

Curtice said that 40% of Brits reject the notion that UK government faces a choice between maintaining its current free trade arrangement with the EU and imposing tighter controls on EU migrants.

“It’s not just a case of Britain wanting to have its cake and eat it. It’s much more fundamental than that. The British public disagrees with the recipe by which the cake is baked,” he said.

More from Business Insider UK:

NOW WATCH: Donald Tusk to UK: ‘we already miss you’

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.