No-deal Brexit may cause economic chaos in Europe

There is significant uncertainty around the way in which Brexit will affect the global economy and major businesses have already sounded alarm over a ‘no-deal’ Brexit.The risk of a no-deal Brexit is increasing amid widespread opposition to the divorce agreement Prime Minister Theresa May negotiated with the European Union.Last week British lawmakers threw out May’s EU divorce deal, and attempts to find a replacement are gridlocked. May’s opponents fear and argue her deal it will leave the country tied to the EU for years to come.Most UK business groups fear a “no-deal” Brexit will cause economic chaos by ripping up the trade rulebook and imposing tariffs, customs checks and other barriers between the UK and the EU, its biggest trading partner.A growing number of UK firms seem to have been braced for a Brexit-induced disruption either by stockpiling goods or shifting operations overseas.The Bank of England has said that in a worst-case scenario, a cliff-edge Brexit could trigger a deep recession, with Britain’s economy shrinking 8% within months as unemployment and inflation soar.Warnings from industry have grown louder as Brexit day approaches. Airbus chief executive Tom Enders said recently that uncertainty around the terms of Britain’s exit was “unbearable.”He urged lawmakers to “stop filibustering around this issue, allow for an orderly, agreed Brexit and find an agreement with Brussels.”With Brexit just two months away, major companies are reportedly acting to cushion themselves against disruption.A major ferry operator said it would re-register its UK fleet under the flag of Cyprus so it could continue to use EU tax arrangements after Brexit.A Japan-domiciled electronics firm warned it will move its European headquarters from London to Amsterdam to avoid potential customs complications after Britain leaves the EU — one of several companies shifting its legal base to an EU member state.Globalisation has, to varying degrees, permeated nearly every industry — but none more so than aviation.Billions of people fly around the world each year and large amounts of cargo are also lifted by air, annually.As Gulf Times had highlighted in a recent column, without international co-operation and access to worldwide markets, obviously, aviation would never have really got off the ground.With the clock ticking, what does Brexit mean for airlines as the UK is currently home to the largest aviation industry in Europe? Industry experts say the UK’s geographical position in the global airlines network is vital as around 80% of all North Atlantic traffic either pass through the United Kingdom or the Irish-controlled airspace.Changes to the relationship between the UK and the EU, post-Brexit, could potentially have tremendous implications for all players in this key market.The global trade body of airlines — IATA, which crunched the numbers of airlines’ planned 2019 capacity, estimated that up to 5mn extra airline seats are at risk of being cancelled if a “no-deal Brexit” occurs.As the March 29 deadline approaches and the United Kingdom gets ever closer to leaving the European Union (EU), the uncertainties that surround Brexit are totally unhelpful for the global economy.