Carney: UK would automatically be hit by export tariffs after no-deal Brexit

The Bank of England's governor also said that thousands of businesses don't have the correct paperwork to export to the EU after a no-deal Brexit.

The Bank of England’s governor, Mark Carney, says that the UK would automatically be hit by tariffs on exports to the EU in a no-deal Brexit.

Earlier this week, however, Boris Johnson said that tariffs wouldn’t necessarily have to be paid if the UK left the EU without a deal. The Tory leadership candidate added that the UK could count on article 24 of the general agreement of tariffs and trade (Gatt).

Some have claimed that the Gatt, a treaty under the World Trade Organization (WTO), would allow a standstill where tariffs are avoided, even without a deal. Others say this can’t happen without an agreement from both sides.

Talking to the BBC, Carney said: “Gatt 24 applies if you have an agreement, not if you’ve decided not to have an agreement or have been unable to come to an agreement.

“Not having an agreement with the EU means that there are tariffs automatically because the Europeans have to apply the same rules to us as they apply to everyone else. If they were to decide not to put in place tariffs they also have to lower their tariffs with the United States, with the rest of the world. And the same would hold for us.”

Carney also said that as many as 150,000 British businesses didn’t have the paperwork in place to export to the EU should we leave without a deal. A worrying 40% of 250,000 exporters were prepared, according to the governor.

As for businesses importing, Carney said there was a “very short-term level of preparation” in the form of goods and materials. They would only last “weeks”, according to Carney:

“No deal means no deal. It means there is a substantial change in the trading relationship with the European Union.”

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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