The implications for London of a no-deal Brexit


Article 50 of the Treaty on European Union provides for an EU Member State to leave the EU with or without a withdrawal agreement or ‘deal’.

The EU and the UK aim to reach agreement on the UK’s terms for withdrawal and on the framework for future relations, hopefully by November, but possibly December. This will allow just enough time for agreement in the UK Parliament and in the European Parliament before the UK leaves the EU on 29 March; this process is likely to need at least three months to conclude.

According to The EU Commission’s Communication (COM (2018) 556) some of the main consequences of UK withdrawal without an agreement are:[1]

  • That the UK will be a third country and Union law ceases to apply to and in the UK
  • There would be no specific arrangements in place for EU citizens in the UK or for UK citizens in the EU[2]
  • The EU and the UK must apply its regulation and tariffs at borders for trade with each other, including checks and controls for customs. Transport between the UK and the EU will be severely impacted. Customs and other controls could cause significant delay e.g. in road transport and difficulties for ports.
  • The UK becomes a third country whose relations with the European Union would be governed by general international public law, including rules of the WTO. This would affect the current level of market integration.
  • UK entities would cease to be eligible as Union entities for the purpose of receiving EU grants and participating in EU procurement procedures.

The Government’s position

The Government has stated that preparations for a no-deal are part of its overall Brexit preparation strategy. Secondary legislation is being laid under the European Union (Withdrawal) Act 2018 that will preserve EU law in domestic law or convert it into UK law on exit day. If the UK leaves the EU without a deal, most EU law will still apply in the UK but as domestic law (i.e. retained EU law or EU-based UK law). But there will be no reciprocity with EU Member States.

The Government believes that a no-deal scenario could be managed in an “orderly” fashion. The Department for Exiting the EU has published more than 100 technical papers across 20 areas of policy to support citizens, business and other organisations in their preparations.[3] Papers published cover topics such as importing and exporting, regulating medicines and travelling between the UK and EU, advice for airlines and car insurance Green cards.

In her statement to the House of Commons on 22 October, the Prime Minister noted that the Government had reached broad agreement on the structure and scope of the future relationship with the EU, with important progress made on issues like security, transport and services. She highlighted protocols on Gibraltar and the UK’s base in Cyprus as important achievements. She reiterated how these developments built on the agreed legal text around the implementation period, citizens’ rights and the financial settlement:

“Mr Speaker, taking all of this together, 95 per cent of the Withdrawal Agreement and its protocols are now settled”.

However, she noted that:

 “There is one real sticking point left, but a considerable one, which is how we guarantee that – in the unlikely event our future relationship is not in place by the end of the Implementation Period – there is no return to a hard border between Northern Ireland and Ireland.”

Following the failure to reach agreement at the 18/19 October EU summit, the EU’s head negotiator Michel Barnier said he needs “much more time” – so a special November meeting is unlikely to happen. The next scheduled EU summit is due to take place 13-14 December.

The National Audit Office report: The UK border: Preparedness for EU exit[4]

In its report, published on 24 October, the NAO concluded that “If there is ‘no deal’ then there would be no implementation period, with a sudden change in the UK-EU relationship. This would have implications for the movement of goods, people, services, and areas of cooperation such as data-sharing a whether the UK and EU could quickly reach agreements on issues such as travel, data-sharing and customs arrangements before March 2019.”

The report argued that “In the event of ‘day one of no deal’ the government has accepted that the border will be ‘less than optimal’. The government does not have enough time to put in place all of the infrastructure, systems and people required for fully effective border operations on day one. It has decided to prioritise security and flow of traffic over compliance activity in the short term.”

Furthermore, it warned that:

  • The most complex issues relating to the border in the event of the UK leaving the EU without a ‘deal’ remain to be resolved;
  • Businesses do not have enough time to make the changes that will be needed if the UK leaves the EU without a ‘deal’

In conclusion, the report found that “To manage potential disruption at the border after 29 March 2019, government departments have begun civil contingency planning. In the event that member states apply third country controls to imports from the UK, there will be a significant impact on the flow of traffic crossing the border. The BDG is working with departments and the Cabinet Office’s Civil Contingencies Secretariat to put civil contingency plans in place. Plans are progressing to cope with issues such as queues of traffic in Kent, and to enable the continued supplies of essential goods and medicines.”

The Mayor

While the Mayor does not attend the joint Ministerial Committee (EU negotiations) unlike representatives of the devolved administrations, he did though have regular meetings with the previous Secretary of State for Exiting the EU.

The Mayor has issued a call to Government to provide more clarity and support to business about the implications of a no-deal and called on the Prime Minister to extend the offer of settled status to EU Citizens currently living in the UK now, regardless of the outcome of the negotiations.

The Mayor has also asked the London Resilience Forum to establish the impact of a no-deal Brexit on critical areas such as access to medicines, energy[5] and food, as well as the ability to maintain emergency care, law and order. The precise impact would depend on to maintain emergency care, law and order. This is designed to complement the work Government is doing and not substituting for it.

Furthermore, the Mayor has also launched a survey of London businesses to determine exactly what preparations they are undertaking and what support they need from the Government and launched a Brexit hub on the London Growth Hub to assist businesses to navigate no-deal preparedness advice.[6]

The Mayor spoke at the People’s Vote rally in London on 20 October and renewed his call for a second referendum.

Impact on the London economy

Economic modelling from the Government (and others) shows that as the cost of trading with the EU increases (via tariffs and non-tariff barriers), the greater the negative impact on the UK economy will be. There will be immediate short-term impacts and then longer-term impacts as the new trading arrangements (once established) between the UK and the EU are worked through.

The Government’s “Cross Whitehall” analysis of leaving the EU gives a range of illustrative profiles of the long-term impact on the level of GDP compared with staying in the EU. All scenarios (EEA-type membership, Free Trade Agreement or WTO rules) show that while the economy will continue to grow, that growth will be slower compared with staying in the EU.

In January 2018, the Mayor published independent impact assessments from Cambridge Econometrics that set out a number of different possible future trading relationships with the EU and their likely impact on the London economy (see Annex 1: Summary of Cambridge Econometrics study).

In answer to an MQ from Joanne McCartney on 13 September, the Mayor stated that the commissioned research showed that London’s economic output could be around 2% lower than it would be if Britain were to remain within the single market and customs union. There would be potentially half a million fewer jobs nationally, with 87,000 fewer jobs in London and nearly £50 billion UK wide investment less. And that “this will lead to a decade of lower growth, which would in terms lead to various cuts to public services from to NHS, police and other areas.”

London’s airports and the risks of a no-deal on flights between the UK and the EU

Commenting on the possibility of flights between the UK and the EU being grounded Sir Amyas Morse, Comptroller and Auditor General of the National Audit Office was quoted as saying to the Brexit Commons Select Committee that there was a risk that flights could be grounded “It’s not implausible, it’s not impossible. It could happen deliberately, it could happen by mistake. It depends on how friendly or unfriendly the accompanying music is while all this goes on.”

This reflects a lack of agreement between the UK and the EU over permissions and safety certificates, amongst other things.

As set out in one of the technical papers on aviation[7] if the UK leaves the EU in March 2019 with no agreement in place, UK and EU licensed airlines would lose the automatic right to operate air services between the UK and the EU without seeking advance permission. This would mean that airlines operating between the UK and the EU would need to seek individual permissions to operate. EU-licensed airlines would lose the ability to operate wholly within the UK (for example from Heathrow to Edinburgh) and UK-licensed airlines would lose the ability to operate intra-EU air services (for example from Milan to Paris).

Flights to and from the EU

If there is ‘no-deal’ with the EU, airlines wishing to operate flights between the UK and the EU would have to seek individual permissions to operate from the respective states (be that the UK or an EU country). In this scenario the UK would envisage granting permission to EU airlines to continue to operate. We would expect EU countries to reciprocate in turn. It would not be in the interest of any EU country or the UK to restrict the choice of destinations that could be served, though, if such permissions are not granted, there could be disruption to some flights.

In order to ensure permissions were granted and flights continued, the UK’s preference would be to agree a basic arrangement or understanding on a multilateral basis between the UK and the EU. Alternatively, bilateral arrangements between the UK and an individual EU country could be put in place, specifying the conditions under which air services would be permitted. By definition any such agreement would be reciprocal in nature. The European Commission has previously acknowledged that a ‘bare bones’ agreement on air services would be desirable in the event of the UK leaving with ‘no-deal’. But as yet there is no such agreement.

Food security

Half of the UK’s food and drink supply comes from within the UK, with 30 per cent from the EU and 20 per cent from the rest of the world[8].

Secretary of State for Exiting the EU, Dominic Raab has said that for food, the Government has “practical measures to mitigate any risks of disruption to supply”. He said this would be achieved through “the recognition of EU food standards, our pursuit of equivalency arrangements on food regulation with the EU and indeed with non-EU countries, and through our support for UK farmers in terms of financial funding schemes”.

He confirmed that contrary to media reports, there were no plans to deploy the army to maintain food supplies and played down the likelihood of the EU not offering some kind of mutual recognition in this area in a no-deal scenario: “Who is credibly suggesting, in a no-deal scenario, that the EU would not want to continue to sell food to UK consumers?”

While some commentators (and some stores including Aldi and Tesco) have interpreted these comments, and fears of protracted delays at customs, as indicating that stockpiling of food should be considered, the retail sector has expressed concerns about the practicalities of stockpiling food. The British Retail Consortium said: “Stockpiling of food is not a practical response to a no-deal on Brexit and industry has not been approached by Government to begin planning for this. Retailers do not have the facilities to house stockpiled goods and in the case of fresh produce, it is simply not possible to do so. Our food supply chains are extremely fragile…”

The Food and Drink Federation (FDF) has said that the technical notices published so far confirming anticipated burdens on importers and exporters would “frighten many SME food businesses”. [9]

Media reports indicate, nevertheless, that work is taking place to prepare the M26 in Kent as a possible parking lot for lorries trying to cross to the continent should there be no-deal, indicating that the Government is anticipating customs delays.

Ferry firm Stena lines, the largest operator across the Irish Sea and the owner of three ports reported that “A no-deal Brexit could affect food supplies and see traders bypass Great Britain. Senior executive Ian Hampton stated that there is “very little readiness” at ports and “anxiety is high”.[10]

In a response to a MQ from Fiona Twycross AM the Mayor stated that

“I am extremely concerned about the potential impact of Brexit on our whole food system given that food imports from the EU constitute about 31 per cent of the UK’s food supply and 35 per cent of food manufacturing workers come from the EU. If Brexit were to result in new regulatory barriers, tariff barriers or lengthy customs delays, it could deepen the skills crisis the food sector already faces, and food imports could significantly rise in price which will have a profound impact upon those already living with food insecurity.”

Medicines supply and availability

Concerns about the potential impacts of a no-deal Brexit on medicines supply in the UK relate to how medicines (and medical devices) will be regulated and monitored for safety in future, and the impacts on medicines supply and future pharmaceutical trade.

UK imports of medicine and pharmaceutical products were worth £24.8 billion in 2016, and mostly came from the EU. UK exports of these products were worth £24.9 billion – around half of these went to EU countries.

The Association for the British Pharmaceutical Industry (ABPI) has said that this reflects: 45 million packs of medicines that leave the UK every month and go to Europe, and 37 million packs of medicines that leave the continent and come to the UK.

Currently, the European Medicines Agency (EMA) provides and coordinates licensing, expertise and support for medicines and medical devices throughout the EU. The Government has said that it wants to seek an ‘associate’ membership of the EMA. The Secretary of State for Health and Social Care has said this means “as close as possible participation with the European Medicines Agency with observer rights”. However, in the event of a no-deal Brexit, and without other arrangements in place, the UK could not continue to participate in the shared regulatory framework with the EMA.

Therefore, concerns have been expressed that a separate regulatory system could mean delays in applications for licences because the UK would represent a much smaller market than the EU/EEA, and this could impact on how quickly medicines would be available.

Beyond the regulation of medicines, there are concerns about potential trade barriers and resulting delays in medicines supply that may occur in the event of no-deal.

On 23 August, Government wrote to hospitals, GPs, pharmacies and pharmaceutical companies, setting out what action would need to be taken to ensure medicines supply to patients continues in the event of a no-deal Brexit.

The letter requested that pharmaceutical companies ensure that by 29 March 2019 they had an additional six weeks supply of medicines on top of the normal buffer stock held and that for products with short shelf lives, suppliers should make plan to air freight these to avoid border delays.[11]

The status of EU nationals in London

A significant number of so-called ‘citizens’ rights’ will be affected by Brexit. The primary one is freedom of movement, whereby currently any EU national can work, live in or provide services in any EU Member State, providing they met certain conditions as set out in various EU Directives. These primary ‘residency’ rights are complemented by a variety of further rights, co-ordinating social security coverage for mobile EU nationals and enabling them to access healthcare, education and so on.

Government is committed to bring forward legislation that would see all EU nationals resident in the UK at the date of withdrawal eligible for either ‘settled status’ itself – ie a new ‘permanent residency’ and a purely UK domestic status – or for the pathway to a ‘settled status’, called ‘pre-settled status’ whereby they can qualify for ‘settled status’ by exercising relevant EU Treaty Rights for a period of five years.

In evidence to the Lords EU Select Committee in June, the Home Secretary stated that “[to repeat the words of the PM] EU citizens living lawfully in the UK will be able to stay. No matter what happens, if you are living lawfully in the UK you will be able to stay.” [12]

Unless the Government’s position changes significantly, all rights described as ‘primary – eg the ability to live in, work in, study in and access public services in the UK – will be retained, at least in the short run, by EU nationals living in the UK even in the event of a no-deal.

However, there is less clarity in areas such as whether EU nationals living here are able to bring over family members (spouses, parents/grandparents) to live with them.

In the event of a no-deal Brexit, the existing reciprocal healthcare arrangements for UK citizens in the EU and EU citizens in the UK would probably end, and while the Government is developing contingency plans for this eventuality there are as, yet, no further details.

At its meeting with EU nationals in City Hall in 2017, the EU Exit Working Group heard a number of concerns expressed, including the:

  • Risk of EU citizens facing discrimination e.g. renting in private sector, accessing banking services, and employment.
  • Scale of the administrative task when all EU citizens will need to make applications to the Home Office.
  • The risk of “administrative injustice” due to the administrative pressure and also vast quantities of new rules being drawn up quickly.
  • Lack of appropriate advice provision – “advice crisis” and “diminishing legal aid opportunities”.
  • Mental health of EU citizens coping with uncertainty regarding their status.
  • Some EU citizens concerned about their status are fearful of accessing public services like the NHS, schools etc.
  • Concern that women and children may find it more challenging to prove the period they have been resident. Women and children already “[fall] through the gaps” due to challenges of demonstrating their right to reside. This is because right to reside is linked to work. Women may have taken time out of work for childcare and other caring arrangements. Also what counts as “work” has been recently redefined by the Government e.g. minimum earnings threshold.
  • Some disabled people are currently unable to gain permanent residence so there are concerns about whether they will be able to gain settled status. There are also concerns for carers. There has so far not been much clarity provided by the Government proposals. Some disabled people may need additional support when making an application for their new status e.g. to complete forms and gather evidence to prove their status.

Security and Policing


The UK’s security relationship with the EU covers various forms of operational and strategic cooperation, including the exchange of a wide range of criminal data and intelligence, speedy extradition arrangements, and collaboration between Member States’ policing agencies on cross-European investigations. Over the years of its EU membership, the UK has negotiated a bespoke arrangement on justice and home affairs (JHA), which has allowed for its selective participation in measures considered to be in the national interest.

The main forms of security cooperation between the UK and the EU

Europol coordinates cooperation in policing across Europe and enables law enforcement officers from across the EU to work together on joint investigations, access a variety of Europol services, including forensics, analysis and training, communicate with ease, and share data on operational and intelligence matters. While Europol has a strong record of operational co-operation with non-EU countries, its membership is limited to EU member states.

The European Arrest Warrant (EAW) allows for the extradition of individuals between EU member states, so that the individual can face prosecution in the country that they are wanted, or serve a prison sentence for an existing conviction.[13] The EAW replaces lengthy extradition procedures and prevents EU countries from refusing to surrender individuals to another EU country.[14] In 2015-16, just over 14,000 EAW requests were made to the UK, and the UK made 241 requests.[15]

Information sharing about people wanted under EAW is stored on Schengen Information System II database, which provides real time alerts to police forces. The database also includes information, for example, on suspect foreign fighters and missing people. Other EU-wide databases and information that the UK currently has access to include, for example, DNA and fingerprint databases (Prüm arrangements); the European Criminal Records Information System, which allows for the exchange of information about criminal convictions; and the Passenger Name Records system, which collects data from travel carriers, such as contact details and travel itinerary for people flying into the EU.[16]

The Government published a position paper on security, law enforcement and criminal justice on 18 September 2017. It proposes the creation of a new security treaty between the UK and the EU following Brexit, which would provide a legal basis to maintain the current arrangements for cooperation and leave open opportunities to “build upon and enhance” those arrangements in the future.[17]

The Mayor has set out six ‘red lines’ where he believes moving away from current arrangements “is simply not an option”.[18] This includes, for example, the EAW. However, the EU’s chief negotiator has indicated that the UK will no longer be part of the EAW once it leaves the EU and that a “streamlined” extradition process will have to be negotiated instead. Norway and Iceland are the only countries to have negotiated a surrender agreement with the EU that shares many of the benefits of the EAW: that, however, took 13 years to negotiate and has still not be fully ratified.

The Met—along with other police forces—is working to examine the implications of losing 40 law enforcement tools under a no-deal Brexit.

In September 2018, the Met told the Police and Crime Committee that “if there is no-deal on security a patrolling officer will not get alerts from international networks, […] We will know less about people from this country travelling abroad committing criminality then we would do in the current arrangements.” The Deputy Commissioner has described some of the possible workarounds as “clumsy” and has said there is “absolutely the potential” for the UK to be less secure and it will certainly be slower to achieve that level of security.”[19]

Discussions between MOPAC and the Government on the Mayor’s six ‘red lines’ has not yet resulted in any guarantees. The Deputy Mayor for Policing and Crime (DMPC) told the Police and Crime Committee that no progress had been made. The DMPC, along with the Met, met with the Rt Hon David Davis MP, former Secretary of State for Exiting the EU, before he resigned and as at September were waiting for meeting with the new Secretary of State.[20]

Preparing for a no-deal

The Met is planning for a range of scenarios and contingencies resulting from the UK’s exit from the EU. The Met Commissioner told the Police and Crime Committee that a small team, led by Chief Constable Charlie Hall QPM, Hertfordshire Constabulary, is working alongside Government departments on the potential impact of a no-deal scenario. This includes, for example, considering the impact on public order. The Commissioner told the Committee about the issues it is considering:

“Are there likely to be planned protests?  Of what sort?  How will they be policed?  What are the issues at the borders?  If there are – hypothetically – queues, what will that mean in terms of policing? […] the London Resilience Forum will be an important part of this thinking as well.”[21]

The London Resilience Forum


The London Resilience Forum (LRF) was established in response to the Civil Contingencies Act 2004 which introduced local resilience forums. The Forum is a central part of the wider London Resilience Partnership (LRP)[22], and provides a structure through which local agencies come together to plan and prepare for localised incidents and catastrophic emergencies, including terrorist incidents and natural disasters. Under the legislation, its duties are to “put in place emergency plans” and to “share information with other local responders to enhance co-ordination and to co-operate with other local responders to enhance co-ordination and efficiency”.

The London Resilience Group supports the work of the London Resilience Partnership and delivers the Mayor of London’s responsibilities for resilience. The ‘London Resilience Team’, as it is also known, sits under the oversight of the London Fire Brigade. The work of the LRG is guided by a Strategic Coordination Protocol which details the “escalating strategic coordination arrangements for London’s response to a disruptive incident”.

Fiona Twycross AM is the current Chair of the LRF and John Barradell is Chair of the London Resilience Local Authorities Panel, a central part of the LRP.

LRF’s role in preparing for a no-deal Brexit

The Ministry of Housing, Communities and Local Government (MHCLG) is leading on engagement with Local Resilience Forums (LRF) on Brexit (in coordination with the Civil Contingencies Secretariat (CCS) and the Department for Exiting the European Union (DExEU)).

It wrote to all local resilience forum chairs on 2 August 2018 to encourage them to consider the potential impact of EU exit on their local area. This included considering how the positions outlined in the Government’s Technical Notices could impact on local plans [23]

MHCLG reported that it would hold four teleconferences over the summer, in partnership with the Civil Contingencies Secretariat and DExEU, to share available information and hear the thoughts of local resilience forums – Fiona Twycross, Chair of the LRF took part in one of these and reported that one of the key themes was looking at how LRFs are preparing for different scenarios.

The Mayor has asked the LRF to assess the impact of leaving the EU would have on access to medicine, energy and food, as well as on the emergency services ability to maintain medical care, law and order.[24]

The LRF held a summit on 17 September for London’s local resilience forums to consider and discuss progress made in planning for leaving the EU, in particular to undertake an assessment at a cross-partnership level, with a view to taking a completed assessment to the LRF in late October.[25]

Annex 1: Summary of the Cambridge Econometric assessment

Cambridge Econometrics: report summary

Five scenarios were developed to model five possible outcomes for the UK and London of the UK leaving the European Union Customs Union and Single Market (see table below). Scenario 1 reflects a status quo situation where the UK remain in the Single Market and Customs Union (the baseline). Scenarios 2 and 3 move from a softer version of Brexit (the UK is part of the EEA, but not the Customs Union in Scenario 2; and is part of the Customs Unions, but not the EEA in Scenario 3), to a harder Brexit in Scenarios 4 and 5 (UK is no longer part of the EEA or the Customs Union). Scenario 4 is the closest scenario to the government’s current position, while Scenario 5 is a more extreme outcome of Scenario 4, which is still plausible within the government’s approach.

The more severe the type of Brexit, the greater the negative impact will be on London and the UK. The results show that Brexit will not only reduce the size of the UK economy (compared to what may have happened if the UK remained in the Single Market and Customs Union), but also put it on a slower long-term growth trajectory (i.e. the economy is still growing, but at a slower rate than if the UK remained in the Single Market and Customs Union). So the cumulative change in GVA over time will keep increasing in the long-term.

The modelling results show that Brexit will have a negative impact on the UK economy across all key indicators, in particular, investment. The fall in the value of investment is greater than that of overall GVA, as the expected fall in Employment growth in the UK and London Population growth in the UK and imports is greater than the fall in exports, so the improvement in the trade balance helps recover some of the loss in investment.

London specific

London is expected to experience a loss of varying amounts of gross value added and employment by 2030 but London is not expected to be affected as much as the UK, in terms of GVA and productivity. Population (and so employment) impacts in London are noticeably stronger than in the UK. London has a larger proportion of non-UK workers, so border restrictions and a reduction in EU migration are expected to impact London the most.

Financial & professional services, Science and Technology, Creative and Construction are among the sectors hit the hardest by Brexit. These are the sectors that make up a high proportion of economic activity in the UK, particularly in London. Construction and Hospitality are expected to see larger impacts on employment in London than in the UK. They tend to require less skilled labour and employ a larger proportion of EU migrants than other key sectors.

Inner and Outer London

The results for Inner and Outer London reflect the results for London, but each part of London is affected in a different way. Inner London is expected to experience a larger negative impact as a result of Brexit in terms of GVA, employment and population (compared to what may have happened if the UK remained in the Single Market and Customs Union), as this is where the majority of EU-dependent economic activities occur. In particular, sectors in London that are likely to be more exposed to the risks of Brexit, such as Financial & insurance, Media, IT Services, Legal & accounting and Head offices & management consultancy, have a greater presence in Inner London than in Outer London. Together, these sectors account for 44% of total GVA and 29% of total employment in Inner London in 2016, compared to 18% of total GVA and 13% of total employment in Outer London.

However, the loss in productivity is expected to be smaller in Inner London where high-value and high-productivity sectors tend to locate. The loss in productivity in Outer London is also driven by a number of population-dependent sectors, such as Construction, Education and Health. This is because jobs in these sectors cannot be relocated and must be filled to meet the needs of the population, but Brexit means that some EU nationals who are currently holding such jobs will be replaced by UK and non-EU nationals who may not be as skilled and experienced.

Sector specific

For both London and the UK, the greatest impacts on GVA are expected to be in Agriculture, Manufacturing and Construction. These sectors are most exposed to high tariffs and non-tariff barriers; in addition, manufacturing is assumed to have a substantial slowdown in investment and productivity. In comparison, impacts on high-value private sector services, such as Information & communications and Financial & business services are more modest and mostly driven by slower investment growth. The financial & insurance sub-sector is also expected to face higher non-tariff barriers after Brexit, particularly as a result of maintaining equivalence with EU regulations. GVA impacts in all other sectors are either very small in line with the assumptions for that sector, or likely to be linked to the supply chain impacts of sectors mentioned above.

The results for employment show that most sectors will be adversely affected by Brexit (compared to what may have happened if the UK remained in the Single Market and Customs Union), for both the UK and London. They also show how productivity may be impacted very differently across sectors. The productivity impacts are expected to be strongest in sectors such as Agriculture and Construction, which are highly dependent on trade and skilled labour. GVA impacts are stronger for most sectors in London than compared to the UK as a whole. However, these impacts are outweighed by the smaller impacts (in percentage terms) in Information & communications, Financial & business services and Government services, the three largest sectors in London in terms of GVA. Financial & business services and Government services are also the two largest sectors in London in terms of employment, employing more than half of London’s workforce, and employment in these sectors are expected to be less affected by job losses than other regions. This shows that the larger and higher value part of the London economy would be able to withstand the negative impacts of Brexit better than the UK as a whole.  Business start-ups and scale-ups: the impact Brexit may have on business start-ups and scale-ups under the various scenarios.

Though the extent and duration of the impact on start-ups, it is likely that the impacts would be negative (compared to what may have happened if the UK remained in the Single Market and Customs Union). On the other hand, it is highly unlikely that entrepreneurial activities would halt following Brexit. New businesses are expected to continue opening in the UK and London, albeit at a slower rate than historically.

Sectors where the impacts of Brexit on economic activity are the largest are likely to experience the hardest hit on start-ups: construction and Financial & business services, Manufacturing, Distribution and Information & communications.

The impacts are expected to be more adverse and slightly more uniform across sectors for London than for the UK, because of its large share of the UK’s total start-ups and the diversity of its start-up population. The most affected sectors are likely to be the same in London, with the addition of Other services, but the impact may be smaller in Financial & business services and larger in Distribution.

Scale ups

– a company starting with 10 or more employees and achieving average annual growth of greater than 20% pa over a three-year period (in turnover or employment). It is an alternative measure of business activity to start-ups, which focuses on high-growth businesses and is not restricted to new businesses.

Administrative and Support Service Activities and Financial and Insurance Activities account for a large share of scale-ups in both the UK and London. In London, the other major sectors are Information and Communication and Professional, Scientific and Technical Activities. The fastest business growth in London is attributable to service sectors, particularly high-value sectors, to a greater extent than growth in the UK as a whole.

Taking the GVA results as a guide to the potential impacts on scale-ups, based on the same argument for start-ups, high value service sectors are expected to be affected more in the UK than in London. On the other hand, sectors that make up a smaller proportion of the scale-up population in London are likely to suffer more from Brexit than their UK counterparts. Based on a comparison of the GVA impacts, it is possible that London may not be as adversely affected as the UK, thanks to the resilience of its high-growth sectors.

Annex 2: Fuel supply chains

According to the Office for National Statistics, in 2015 the UK’s main types of imported fuel were crude oil, natural gas and petroleum products (for example, petrol and diesel). The UK also imports electricity and coal and other types of solid fuel (like wood) in smaller amounts. The UK has a diverse range of suppliers – Norway is the single most important exporter for crude and natural gas, while Sweden, Russia and the Netherlands are the biggest exporters of petroleum products to the UK.

In 2017, the UK imported 4.2% of its electricity demand through interconnectors to Europe and the island of Ireland, and 36.8% of its gas. The UK also imports Liquified Natural Gas, though not through interconnectors and predominantly not from EU countries.

The EU’s Internal Energy Market (IEM) facilitates harmonised, tariff-free trade across these interconnectors. The Government’s Brexit White Paper said the UK wanted to “explore” options for the UK’s future relationship with the IEM and contains options to either leave or remain in the market. Therefore, it is possible that ‘no-deal’ could be much the same as a deal, as the UK could stay in or leave the IEM in the event of a deal or leave in the event of no-deal.

While the National Grid has stated that no-deal posed no immediate risk to the UK’s security of electricity supply, which could be supported through greater domestic generation, there may well be longer term implications which could affect the resilience and flexibility of the UK’s energy supply lines which could ultimately push up costs.[26]

[1]This briefing draws extensively on the House of Commons Library briefing paper 08397 ‘What if there’s no Brexit deal?’ all quotes are from that document unless stated.

See – page 27 of the full report for the full list.

[2] The PM has made it clear that EU citizens living lawfully in the UK will able to stay no matter what deal is agreed.

[3] See


[5] See annex 2 for a comment on fuel security


[7] See

[8] Op. cit. p9

[9] Op. cit. p119



[12] Op. cit p.100

[13] National Crime Agency, European Arrest Warrant statistics

[14] European Commission website, European Arrest Warrant

[15] The number of requests received by the UK does not represent the number of wanted people in the UK. Some member states issue requests to numerous member states when they do not know where a subject may be. See National Crime Agency, Historical European Arrest Warrants statistics: Calendar and Financial year totals 2004 – May 2016, May 2016

[16] House of Commons, Brexit: implications for policing and criminal justice cooperation, 24 February 2017

[17] HM Government, Britain seeks comprehensive security and law enforcement partnership with EU after Brexit, 18 September 2017

[18] These are Europol; the European Arrest Warrant; the Schengen Information System II; EU Passenger Name Records; the European Criminal Records Information System; and Prüm arrangements (access to DNA profiles, fingerprint data and vehicle registrations). See Mayor of London, Mayor’s six security red lines on Brexit, 19 October 2017

[19] Meeting of the Police and Crime Committee, 4 September 2018

[20] Meeting of the Police and Crime Committee, 4 September 2018

[21] Meeting of the Police and Crime Committee, 4 September 2018

[22] The London Resilience Partnership (LRP) is made up of more than 170 organisations, including the emergency services, local authorities, health organisations, the GLA, transport companies, utility providers, the military, central government, business representatives and voluntary organisations.

[23] See

[24] See

[25] Andrew Dismore has requested information on the summit in an MQ: (

[26] Op. cit. p 132