Government has not looked into economic implications of leaving EU without a trade deal, says Brexit Secretary David Davis

BREXIT SECRETARY David Davis stunned MPs today by admitting the Government had not calculated the economic impact of a ‘Hard Brexit’.

The Tory hardman revealed the Brexit Bill would get Royal Assent tomorrow – the final rubber stamping necessary before the PM can formally launch divorce talks by triggering Article 50.

He confirmed that leaving divorce talks with Brussels under World Trade Organisation rules would mean a big change in our dealings with the EU.

But he insisted that crashing out of the EU with no trade deal wasn’t as “frightening” a prospect as some doom-mongers think.

The minister accepted it would mean tariffs of 30-40% on agricultural exports and 10% on cars, the loss of EHIC health insurance cards for travellers and passporting rights for financial sector firms, as well as departure from the EU-US Open Skies arrangements for air transport.

But he said it will be possible to devise mitigating action in response to these issues, and it would be “otiose” to estimate their economic impact until that work has been done.

He told the House of Commons Exiting the EU Committee that he expected to be able to provide forecasts in about a year’s time.

He added that a so-called Hard Brexit would allow Britain greater opportunities with the rest of the world – such as “relaxing things” for the 60 per cent of trade with countries outside of the EU.

And he told MPs: “I have a fairly clear view of how it will work out, I just haven’t qualified it yet. We will get a quantification later on, but it is quite plain how it will work out.

“On the one hand, we have the aim of a good comprehensive free trade agreement.

“In the event we don’t get that or there is no conclusion, we will have a fairly extensive contingency plan, which is already under way.”

Mr Davis’ comments came as the European Council president Donald Tusk said that Europe will not be “intimidated” by British threats to walk away from trade talks if it cannot get a good deal.

And his words appear at odds with some of his Cabinet colleagues, who he briefed to be ready for the “unlikely scenario” of the UK crashing out of the EU without a deal – a prospect which Foreign Secretary Boris Johnson said this weekend would be “perfectly OK”.

Prime Minister Theresa May has made clear that she regards no deal with the EU as being better than a bad deal.

But asked whether he thought leaving without a deal would be bad for the UK, Mr Davis told the committee: “I think it is not as good an outcome as a free trade, friction-free, open agreement, which is why we are trying for that.”

Confirming that no assessments of the economic impact of failure to reach a deal had been carried out since his appointment as Brexit Secretary, Mr Davis told the committee’s chair Hilary Benn: “Any forecast you make depends on the mitigation you make, and therefore it would be rather otiose to do that forecast before we have concluded what mitigation is possible.”

But he added: “You haven’t asked me about the upsides – for roughly 60% of our trade we could relax things the other way.”

Explaining Mrs May’s “no deal is better than a bad deal” mantra, Mr Davis said: “She said that because in the emotional aftermath of the referendum, there were lots of threats of punishment deals and all the rest of it.”

And he also took a swipe at Mr Johnson’s TV interview comments, telling the committee: “I do my job on the basis of facts and data and research and analysis and operational planning, and off the back of that I will give answers that are accurate and factual – not throwaway lines in interviews, factual answers.”

Mr Benn responded: “Perhaps you should do all the interviews on this, rather than some of your colleagues.”