The foolish claim of the Brexiteers in the run-up to the 2016 referendum was that “they (the EU) need us much more than we need them”. The experience of the 15 months since the UK delivered its A50 notice under the treaty of Lisbon is that this is simply not true. Whilst, plainly, the EU would still be happy if the UK decided to remain in the bloc, it is not desperate to do a deal with the UK at all costs and the UK would suffer most from a “no deal” Brexit. Mrs May continues to insist that a no deal exit is preferable to a “bad deal”, but any informed observers know that this is just rhetoric.
However, the IMF points out that the Republic of Ireland’s economy would take a bad hit in the event of a no deal scenario. The IMF points out that the UK and Irish economies are highly integrated (and have been ever since the creation of the Republic) which is a close echo of the situation of the UK and the rest of the EU (to a greater or lesser extent across the bloc).
The IMF estimates that the EU economy as a whole could see a 1.5% contraction on the back of a no deal exit, but the Irish economy would be harder hit with a 4% loss. The closer the ties between the UK and individual EU state trading partners, the harder the hit to a disruption in that trade, of course – but the UK stands to lose the most.
The IMF believes that a soft Brexit (the kind on Mrs May’s Christmas wish list) would have a minimal effect on EU GDP whilst if a Canada-style deal replaced the current membership, EU GDP would see a 0.8% hit.
The Brexiteers have never been too keen on economic forecasts (unless produced by Professor Minford) and the minister responsible for trade outside the EU, Liam Fox, puts the damage of a no deal scenario to Ireland at 8% (he claimed that a post Brexit EU free trade deal with the UK would be “the easiest in human history”, so his form is hardly reliable). Fox claimed that “The ball is now in their (the EU’s) court”, implying that they will have to strike a deal to avoid economic harm to Eire. The EU are likely to find mechanisms to support Ireland in the event of a no deal scenario since it is remaining in the bloc of 27 EU nations, is in the Eurozone and single market.
As the IMF put it: "The integration of the EU27 countries and the United Kingdom has strengthened over time, reflecting shared gains from the EU's single market. Conversely the departure of the UK from the EU will inevitably represent a loss for both sides. The UK is among the top three main trading partners of the euro area. Cross-border capital flows between the UK and the euro area are large migration flows are considerable. Higher barriers to trade, capital flows and people movements following Brexit could disrupt these links, reducing trade, investment and labour mobility."
Experts, eh, who need’s ‘em