Brexit secretary: No one can rule out no-deal recession

By Beth Rigby, political editor

What might a no-deal Brexit really look like? Steve Barclay, who is responsible for no-deal preparations, can’t rule out a recession, price rises in the supermarkets, or traffic jams on the roads.

And it’s little wonder. Quitting the EU without an agreement is uncharted territory and the level of disruption depends on so many things out of the government’s control.

Much depends on whether the EU will put in reciprocal arrangements with the UK over a range of areas from security co-operation (on agreements such as the European Arrest Warrant) to maintaining the free flow of goods across borders.

It also depends on how prepared businesses – particularly small firms – are for a no-deal exit and how consumers and the financial markets react.

Perhaps it’s because of all that uncertainty that Mr Barclay, the Brexit secretary, admits that he cannot rule out a recession in the UK in the event of no-deal.

“As a former Treasury minister no one can ever rule out what could happen in the future,” he said in an exclusive interview with Sky News.

“The question is are we doing everything we can to prepare and are we trying to get a deal in the first instance, but if not how do we prepare in a sensible and professional manner? And that is what we’re working extremely hard for the government to do.”

Mr Barclay, a Boris Johnson-backing Brexiteer, said he was “very keen to ramp up preparations now” for a no-deal and said he was preparing for a information blitz for small businesses in the autumn to help them prepare, while also getting ready to ramp up the numbers of staff working on no-deal preparations after the summer.

He is clear that not being ready on time is not an option, as he urged government departments not to drag their feet on no-deal preparations.

“We’ve already extended twice and we’ve had additional time and we’re using that time and one thing I’ve been very clear with the Treasury and other departments within government about is that we do need to speed up our preparation,” he said.

“We do need to drive those plans forward and ensure we are ready, because I think your viewers would quite rightly ask the question three years after they voted to leave if the government were not ready to do so.”

But with Brexit coming down the tracks less than two months before Christmas, the Brexit secretary admitted he could not guarantee there will not be some shortages or that prices will not go up – saying that all the government could do was keep preparing to mitigate risk.

How will consumers react? There are already plenty of reports that people are stockpiling medicines and essentials such as toilet roll and nappies for fear of shortages.

Mr Barclay assured me he wasn’t personally stockpiling and said people didn’t need to start panic buying.

He said: “Big companies have well established plans, they have had teams looking at this now for more than two years. And a lot of work has been done both with the private sector, the supermarkets and others to ensure we prepare as best we can. But it’s better to leave with a deal.”

When the UK narrowly voted to leave the EU three years ago, that was the expectation of everyone else too. There was no talk of leaving without a deal, particularly given how tight the vote had been.

It all pointed to a compromise deal which would honour the result of the referendum, while also reassuring the 48% of people who voted to remain that ties with the Brussels would stay strong.

And yet here we are, still in the EU and parliament in deadlock. And the corollary is that something that was once unthinkable is now becoming a very real outcome: the Tories are pivoting to a no-deal Brexit, “do or die”.

Anyone who would be prime minister in right now has no other policy option: the incoming leader constrained by the political considerations of the Conservative party. However, parliament is not and there are backbenchers across the House who are determined to try to block no-deal.

Hilary Benn, Labour MP and chair of the Brexit select committee, told Sky News he was “very concerned” about the prospect of no-deal and said parliament would move to frustrate it in the autumn.

“The alternative to jumping off a cliff is deciding you are not going to do it,” he told Sky News. “There is no mandate in the 2016 referendum for a no-deal Brexit. Leave didn’t say vote for us and we’ll leave without a deal.

“I don’t believe parliament will let a new PM to push the UK over the cliff.”

Mr Benn says that parliament could pass a motion – as it did earlier this year – to say it does not support a no-deal Brexit, and challenge the new prime minister to ignore MPs and bring upon himself a vote of no confidence in the government.

Trying to stop a no-deal Brexit would trigger a dramatic and profound political crisis, just as pressing on with one could lead to a damaging economic shock.

Three years on from the political earthquake that was the referendum result, we could be about to get another one.