Cliff-edge Brexit would be insane, says ex-ambassador Sir Ivan Rogers
A "cliff-edge" Brexit with no exit deal would be "insane" and economically damaging for the European Union and Britain, but that does not mean it will not happen, the UK's former ambassador to the EU has said.
Sir Ivan Rogers, who quit in January after telling Theresa May that Brussels diplomats thought it might take 10 years to reach a deal, said the EU has a strong incentive to reach an agreement with Britain.
But he warned that its "legalistic" nature could mean that if the Prime Minister follows through on her threat to quit with no agreement rather than accept a bad deal, "everything falls away".
Sir Ivan said the consequences of the UK falling off the "cliff edge" into a "legal void", relying on World Trade Organisation rules, would be "nuts" and both parties need to strike a deal.
Appearing before the Commons Brexit Select Committee, he pointed out that Bank of England governor Mark Carney has said such a scenario could pose a risk to eurozone stability.
Sir Ivan said: "There are other consequences in other sectors which would make it an insane thing to do."
He added: "This (the EU) is a very legalistic body that we are dealing with and they will say you have transformed yourselves overnight from having been a member of this body to a third country outside the body and in the absence of a new legal agreement everything falls away.
"We all know that that's nuts in the real world, because why would you want to stop UK planes flying into European airports.
"We know that this is insanity ... we know that stopping carcasses and consignments and saying 'your slaughterhouses are no longer approved' - we may know that that is a nonsense in the real world. Sadly, that does not stop it necessarily happening."
On the EU he said: "That is economically damaging for them, they will obviously assert and insist that it's less economically damaging, but ... we will be, when outside the European Union, their single biggest trading partner, so why would you want an abrupt stoppage of flows and goods and services?
"Unless you're nuts you ought to want to do that, so there is an incentive on them to agree as well."
Sir Ivan also warned that the EU is unlikely to agree specific deals for industries like car manufacturing which are highly dependent on Europe-wide supply chains, despite pressure from the likes of Germany's automotive industry.
He pointed out that German Chancellor Angela Merkel has repeatedly said "no sectoral interest will be put above the general interest".
"Well, with Merkel - if she's still there - the unity, the unity of the 27, will win out and I think she and others will agree that there will be no sectoral deals in either the single market or the customs union, and I expect that to appear in either the guidelines or the negotiating mandate," he told MPs.
Sir Ivan said the issue of money is likely to get "gory".
He said "the key players, the key officials, the key technocrats, the key theologians" think a new relationship may not be agreed until 2022 even if negotiations proceed "unprecedentedly fast", and b efore that deal is struck, European countries may want to keep hold of "British dosh" during a transition period to avoid a squeeze on the Brussels budget.
His comments come amid reports that the EU is seeking a 60 billion euro (£51 billion) "divorce deal" before negotiating a new free trade agreement.
Sir Ivan said: "From all the (EU) 27 (countries), albeit in different ways, depending on whether they are net recipients or net contributors, the budgetary issue now comes to the fore.
"And I think we can expect a number of them to think, 'well, if the British want a future trade deal, and they want some form of transitional arrangement before a future trade deal - all big ifs - then this will come together at some gory European Council in the autumn of 2018 and it will come together with the money equation'.
"There will be some who will want to play hardball and say, 'well, absent British money over a transitional period, why the hell should we give them any trade deal?'"
Sir Ivan expressed doubts about an independent Scotland remaining in the European single market as the rest of the UK pulls out, because countries like Spain, which contains Basque and Catalan secessionists, would be reluctant to set a precedent.
"It seems to me legally creative, shall we say," he said.
"And I would think that the usual suspects in some of the usual member states would be extremely worried about the precedent - so you start then with Spain, but you probably have Belgium and Italy as well, who will be worried about the implications for their jurisdictions and the unity of their jurisdictions if you ever get into differentiation."
Liberal Democrat former cabinet minister Alistair Carmichael urged Mrs May to admit the best option for the UK is to remain in the single market, given that Sir Ivan said the EU would not agree key sectoral deals.
"Theresa May and her Brexiteers are living in La La Land," he said. "They are promising special deals to key sectors that are unlikely to ever be delivered."