These are concerning words coming from the EU chief negotiator. A no-deal Brexit means a lot more friction for businesses than leaving with a UK/EU free trade deal.
The most significant costs of a no-deal Brexit will be tariffs and quotas on EU goods coming into the UK, which will have to be paid by UK consumers. But a no-deal Brexit also means tariffs and quotas on UK goods going into the EU, which makes UK exporters even less competitive.
We already know that UK exporters will be hit with a cost shock selling goods into the EU due to a business residency requirement. But if tariffs and quotas come on top the UK will become a very unattractive place for global companies to do business in Europe. Many global businesses that used the UK as their European trading hub will be forced to set up an entity in the EU next year. The UK risks losing its competitive advantage as a European trading hub.
We know that the EU wants fair-competition between UK and EU businesses as well as access to the UK’s fishing waters. In return, the EU offers zero tariffs/zero quotas market access for UK goods, and this what a potential trade deal will look like.