The U.K. needs a hugely ambitious trade policy—equivalent to deals with seven Americas—to fully compensate for a no-deal Brexit, according to Bloomberg Economics.
A free trade agreement with the U.S. would offset just a fraction of the cost of leaving the European Union without any deal, while even an arrangement with the EU would cover only half the cost.
“If the U.K. does decide to opt for a clean break then it will have to adopt a highly ambitious trade policy to compensate for losing its membership of the EU,” economist Dan Hanson said in the study, “The Free-Trade Brexit Challenge – Find 7 Americas.”
The analysis underscores one of the issues surrounding a no-deal Brexit as Prime Minister Theresa May tries to reach an agreement before a November deadline and handle vocal opposition within her government. Her Conservative Party is holding its annual conference this week, with the event dominated by Brexit and whether former foreign secretary Boris Johnson will launch a bid to become prime minister.
The risks of crashing out without a deal are already showing. Carmaker Toyota Motor Corp. said it would mean a temporary stoppage at its plant in England and disrupt the 60 million pounds ($78 million) in weekly revenue it generates there. Last month, BMW said it will bring forward a four-week stoppage for routine maintenance at its Oxford factory from the summer to April 1, the date the U.K. is slated to leave the EU.