The U.K. doesn’t yet know very well what Brexit means, what financial impact it will have or how exactly to execute it.
They are the big takeaways from a week of turmoil that prevented Primary Minister Theresa May from unlocking the second phase of Brexit talks about the future conditions of trade between the U.K. and europe.
Negotiations continue, but period is tight: Britain might crash out of your EU if zero package is agreed by March 2019, an end result that the U.S. Chamber of Commerce warned Wednesday will be “devastating.”
Businesses are preparing to move jobs and investment out of your U.K. in early 2018 if trade talks haven’t started.
Nervous investors have pushed the pound straight down against the dollar this week.
1. Britain doesn’t know very well what Brexit means
The biggest question Britain must answer is what sort of relationship it wants with the EU, its biggest export industry, once it has left.
May has clarified that the U.K. will leave the EU’s internal industry and customs union. But beyond those red lines, little has been settled.
Britain need to decide whether it wants to negotiate continued easy access to EU markets or accept significant barriers to trade.
Both scenarios include financial risks, and political implications, that are bound to upset factions within May’s own party.
Settling on a recommended course of action possesses been made more challenging by the fact that her cabinet, which includes different views about what the “end state” should be, possesses yet to debate the issue.
“We’ve not had a specific mandating of an end state location,” Treasury chief Philip Hammond explained Wednesday.
One of these of the resulting confusion: Hammond also said it had been “inconceivable” that Britain would leave from the EU without settling its personal commitments — in effect, paying a divorce bill that could set you back tens of vast amounts of euros.
The prime minister’s office countered quickly, saying that “there is nothing agreed until everything is agreed” with the EU.
The risks of putting off the decision too much time are profound. Crashing out of your EU without a package could imply grounded flights, rotting food at the borders and a shortage of parts for automakers in the U.K.
2. The government hasn’t assessed the financial impact
Britain’s top Brexit negotiator David Davis said Wednesday that his section has not studied how leaving the EU would affect particular sectors of the overall economy.
“I think … there’s no systematic impact evaluation, no,” he advised a parliamentary committee.
Related: Britain and EU generate improvement on Brexit divorce bill
Davis defended the government’s preparedness, arguing that such studies would “not necessarily get informative” and that their usefulness will be “near zero.”
“You don’t have to do a formal impact evaluation to understand that when there is a regulatory hurdle between our producers and their industry, that you will see an impact,” he said.
Hilary Benn, a member of the opposition Labour Get together, said it had been “extraordinary” that Davis had not analyzed the economic influence of such a significant event.
Davis said his section had studied the size and scope of industries — but had not tried to determine how their performance will be affected by Brexit.
Consulting strong Oliver Wyman says 75,000 finance jobs could be dropped in the long-term if there’s no Brexit deal.
Britain’s automotive industry possesses warned that the price of cars imported from European countries would go up by £1,500 ($2,000).
3. There is no clear path forward
May failed previously this week to move Brexit negotiations to the critical issue of future trading arrangements.
The prime minister hoped to convince the EU that hard barriers wouldn’t normally return to the border between Ireland and Northern Ireland after Brexit.
The offer was scuttled after Northern Ireland’s Democratic Unionist Get together (DUP), which props up May’s minority government, objected.
Irish border: The ‘oxymoron’ that could derail Brexit
The episode underscores the difficult balancing act facing May.
Her political party is divided in Brexit, and she need to keep the DUP happy so that you can prevent her government from collapsing.
As well as the Irish border and the divorce bill, the rights of EU citizens that live and job in Britain, and the rights of Brits who stay in the EU, should be settled to the satisfaction of all 27 remaining EU members.
Only then can talks approach onto trade. That may not happen now this season.