Date: 12/3/2017
LONDON — The U.K. needs to start preparing for the “real” possibility that it will leave the European Union without a deal, the House of Common’s Foreign Affairs Committee warned in a report published Sunday.

Once the British government triggers Article 50, which Prime Minister Theresa May has said she will do by April, it will have two years to negotiate the terms of its new relationship with the bloc. The committee said there was every chance negotiations with Brussels could collapse within the next two years, forcing Britain to leave without even a transitional deal to smooth its exit.

“Even if all sides enter into the process with goodwill and the desire to ensure a successful outcome there are many reasons why the negotiations might fail,” the committee warned. It concluded: “The possibility of ‘no deal’ is real enough to justify planning for it.”

May’s government disputed the likelihood a deal wouldn’t be reached within that time.

“We enter these negotiations aiming for a positive new partnership with the EU, including a comprehensive agreement on free trade,” a government spokesperson said in response to the parliamentary report. “We are confident we can achieve such an outcome and that it is in the interests of both sides.”

The government does, however, recognize the need to prepare for all potential outcomes, including “the unlikely scenario in which no mutually satisfactory agreement can be reached,” the spokesperson said.

The committee of MPs from all political parties highlighted disagreement over Britain’s “exit bill” — estimated by some EU officials to total €60 billion — as well as uncertainty over post-Brexit rights of British citizens in Europe and EU citizens in the U.K., as major stumbling blocks that could cause negotiations to drag talks beyond the two-year limit.

The prospect of a return to a hard border between Northern Ireland and the Republic of Ireland; legal uncertainty caused by the “Great Repeal Bill” that would roll back EU laws’ applicability in Britain; and the sudden end of privileged trade ties with Britain’s main international partners were also listed as sources of concern.

Ending the Article 50 period without a deal could lead to a “short, sharp shock” that might force both sides back to the negotiating table, the report stated. The committee also found that in certain circumstances “no deal” might be better for the U.K. than a bad deal, which, for instance, forced London to pay “a large sum to the EU in settlement of U.K. liabilities, with no provisions for any preferential trade arrangements or transitional arrangements towards a mutually beneficial future relationship.”

However, the report said it was “clear” that “a complete breakdown in negotiations represents a very destructive outcome leading to mutually assured damage for the EU and the U.K.”

The reported stated a collapse in talks would badly damage the EU and U.K. economies and damage both sides’ international reputations. “Individuals and businesses in both the U.K. and EU could be subject to considerable personal uncertainty and legal confusion. It is a key national and European Union interest that such a situation is avoided,” the report stated.