More than four years after the Brexit referendum, the UK’s departure from the EU has been a lengthy process with a lot of ups and downs. As we are now approaching the end of the transition period on 31 December, and while the EU leaders met once more to determine a firm stance, the question remains: what would be the consequences of a no-deal between the EU and the UK?

There are no simple answers when it comes to Brexit. Perception differs across various groups of the population. “People have not really felt a difference in their daily life; they think that Brexit has been finalised,” said Irina von Wiese, British Politician and former Member of the European Parliament, Renew Europe Group. “The crunch time will come after the end of the transition period.”

According to Tom Parker, President of the British Chamber of Commerce in Belgium, and Chairman at Cambre Associates, it is mostly small businesses that are going to absorb the impact. “In a no-deal situation, we are talking about a drop of 8% of GDP (Gross Domestic Product)”, he points, “while a deal could mitigate the damage to 3.5% of the GDP and become a starting point for future negotiations”.

It comes as no surprise that the EU negotiation team has the full backing of the bloc’s powerhouse, Germany. “The German industry is supportive of a deal. However, we need a robust dispute settlement mechanism, so we do not have a competitor at our door,” mentions Nicolai von Ondarza, Head of Research Division at Stiftung Wissenschaft und Politik, German Institute for International and Security Affairs.

The grass is greener on the other side

Brexit places the UK in serious economic and political turbulence. Even with a deal, the UK is estranging itself from  its main trading partner and will bear the consequences of not being part of the single market and the economic union. Internally, Scotland has raised the issue of independence and is trying to find a way back to the EU, while the perspective of closing borders in Northern Ireland is not only putting strains on the island but goes on to threaten trade relations with the US.

However, it is not only the UK that will suffer. “It is the first time a country has left the EU – where does that leave the EU?” questions Ms von Wiese, highlighting that the biggest hit of Brexit is “the significant weakening of the EU and its standing on the world.”

“EU leaders should look at the context of existing member states: a bad deal can create the wrong precedence, with long-term consequences,” agrees Mr Parker.

What is in a deal?

So, what are the main points blocking a deal that everyone seems to want but no one can strike? Here are the open issues in the negotiations as they stand today, according to Mr von Ordanza:

• Level playing field, governance, and state aid: Between the two sides, there is a gap of interpretation which could lead to further breaches of trust.
• Fisheries: The EU wants to keep full access of fishing fleets as a pre-condition for a free trade agreement.
• Internal market bill: Westminster’s attempt to overtake internal trade post-Brexit is not only leaving the four devolved UK governments in fear of losing more power; it will also most certainly lead to breach of international/EU laws.

The real crunch time is not now but mid-November; that is the last moment for the European Parliament to vote on a potential deal.

This article is based on the latest On the Agenda webinar series, organised by the European Liberal Forum, on the topic of Brexit. See the full discussion here.

Don’t miss our next On the Agenda on the future of EU – Russia Relations which will take place on 29 October. Register here.