'No deal' Brexit could cost UK, EU companies a reported £58b

  • 'No deal' Brexit could cost UK, EU companies a reported £58b

'No deal' Brexit could cost UK, EU companies a reported £58b

But mounting differences over Britain's divorce from the European Union have led the bloc to warn repeatedly that time was running out, that the post-Brexit transition was not given, and that London should be more precise and realistic on what sort of future ties it sought.

Companies in the United Kingdom and the European Union (EU) can face additional costs of 58 billion GBP (80 billion USD) per year if the Brussels and London authorities fail to reach a deal after Brexit, according to a report by the consulting firm Clifford Chance.

If the United Kingdom stays in a form of customs union that would reduce the costs for both sides by about half, the report said.

"These increased costs and uncertainty threaten to reduce profitability and pose existential threats to some businesses", the report said.

Britain's Tory-led government has allocated £3 billion (US$4.15 billion) to cope with a "hard Brexit", while businesses are likely to be formulating and implementing their own policies and contingency measures to tackle the financial turmoil such a scenario could bring about.

According to the report, however, if the country remains in any form in a customs union, it will reduce costs for both sides by nearly half.

The EU last week snubbed British Prime Minister Theresa May's calls for a special post-Brexit deal by offering London a free-trade agreement with no special treatment for Britain's mighty financial sector.

A key point to highlight from the report is that 70% of the extra costs in the United Kingdom will be shared across just five industries - namely financial services, cars, agriculture and food and drink, consumer goods, and chemicals and plastics.

Financial services firms in Britain would suffer the biggest hit because, unlike some automotive and aerospace firms that can switch to domestic suppliers of components, they will have to set up new operations in the European Union to continue serving clients. On this background, the Central Bank of England warned that about 10,000 jobs in finance could be lost by the end of the year.

"Germany would be the hardest hit of the European Union member states, especially its vehicle industry which would shoulder a third of the estimated 9-billion-euro losses".