LONDON/BRUSSELS (Reuters) – Britain and the European Union sought on Sunday to strike an elusive trade deal, with failure likely to end with trade in chaos, markets tumbling and a huge economic price to pay.
Here are some of the potential pressure points of a no-trade deal after five years of Brexit crisis.
STERLING
Investors and banks have predicted that a deal will eventually be done, so a no-deal would hit sterling, according to major foreign exchange traders.
The shock referendum result on June 24, 2016 sent the pound down 8% against the U.S. dollar, its biggest one-day fall since the era of free-floating exchange rates began in the 1970s.
That was nearly double the 4.3% drop on Sept. 16, 1992, when financier George Soros “broke the Bank of England” after his bets against the pound were instrumental in the currency’s exit from the European Exchange Rate Mechanism.
TRADE
Overnight Britain would lose zero-tariff and zero-quota access to the European Single Market of 450 million consumers.
Britain would default to World Trade Organization (WTO) terms in its trade with the 27-state bloc, making it in effect as distant to its biggest trading partner as Australia.
Britain would impose its new UK global tariff (UKGT) on EU imports while the EU would impose its common external tariff on UK imports. Non-tariff barriers could hinder trade, with prices predicted to rise for consumers and businesses.