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First of all, a no deal does not mean at all that the UK won't leave the Euro, but in fact it means that the UK and the EU are still unable to reach an agreement regarding the divorce and this scenario would create uncertainty about what would happen next, so no doubt, this will shock the financial markets worldwide.

So, briefly what would happen in case of a no deal?

  1. The UK would apply to the WTO (World Trade Organisation) trade rules, for example, Canada could impose a 6.1% tariff on British cars.
  2. The UK would be freed of the EU trading rules but it would face high external tariffs on exported goods and services, as well as high tariffs on imports and this is a high rate of inflation, so will the BOE take it seriously regarding a change in monetary policies to avoid inflation and cash outflows?
  3. Big businesses could relocate their headquarters to the EU.
  4. Some British products might get rejected by the EU since new rules and regulations and certifications might be required for products coming of the UK.
  5. Uncertainty regarding the expats, since a large number of Britons are in EU, and the same goes for EU since even a larger number of EU expats are in Britain.
  6. The UK Government would no longer pay the annual contribution budget to the EU, which is around 13 billion pound. (that could be the only advantage)
  7. In addition to the Irish boarders which would become an external frontier for the EU.

The world is awaiting, 9 more days to go.

Rabih EL Jamal (CFA)