Brexit Not Happening Is Now Definitely a Possibility

Negotiations over Britain's departure from the EU are at a standstill. Most commentators suggest fault lies either with Europe and its vindictive desire to punish Britain, or the unreasonable demands being made by the British delegation. But who really knows? Perhaps you believe Liam Fox, who has suggested the blame lies squarely with the BBC.

Whoever is responsible, stalled talks have led to speculation that Britain could be heading for a "no deal" Brexit. Now, I've watched enough game shows to know that you can keep saying "no deal" as much as you like, but you still get lumbered with whatever's in the final box. If this were the Theatre of Dreams, that box might just contain £350 million a week to spend on the NHS. Unfortunately, Noel Edmonds is nowhere to be seen (possibly the first time this has ever been a cause for concern) and we know for sure what this box contains: a tanking economy and three-hour queues at passport control as everyone tries to escape to Lisbon.

There is, potentially, another way out of this mess. Last week a poll emerged which suggested growing public support for abandoning the whole Brexit idea. A YouGov survey found 47 percent of respondents thought leaving the EU would be a mistake, compared to 42 percent who thought it was the right thing to do. More than one in 20 Leave voters (7 percent) said they thought they had made the wrong decision, while the same number said they didn't know.

If the public is losing enthusiasm for Brexit, who could blame them? Even the people in charge don't seem that keen. David Davis has refused to publish a series of government reports on the impact of leaving the EU, ostensibly for fear of damaging the UK's negotiating position, but, in reality, almost certainly because doing so would reveal the extent to which we're fucked. We all know Boris Johnson is only pro-Brexit as long as Brexit is pro-Boris Johnson. And Theresa May recently came under fire for refusing to say she would vote leave if the referendum was held again. Which, in fairness, is a bit like criticising someone for expressing too little enthusiasm while being forced to dig their own grave.

WATCH: How Brexit will affect countless British businesses

So is avoiding Brexit really a possibility? I called Jonathan Portes, professor of Economics and Public Policy at King's College London, to ask him about the implications of "no deal".

First up, he told me there's still some way to go before we can assume what the outcome of the government's Brexit talks might be. "What we won't have, at least right away, is no deal," he said. "What might happen is a breakdown in negotiations. There's plenty of time for both sides to come back to the table."

However, should the prospect of "no deal" continue to loom large, the consequences could well be grave enough to shift the public's view. "If there was a very significant economic reaction – if the pound falls, or, even worse, if there are companies very publicly saying this will lead to them cancelling investment or moving out of the UK – then opinion might turn," he said.

That's hardly out of the question. Just last week, the pound tumbled after news broke that Brexit talks had stalled, only to bounce straight back when Brussels signalled it would be open to a two-year transition deal. This week the chief executive of IKEA became the latest business leader to call on the government to reach some kind of settlement with the EU, and said prices have already had to rise since the referendum. And who really wants to pay more for Swedish meatballs?

READ:

Most economists believe the chances of Britain avoiding Brexit are small. Last month, Morgan Stanley published a report putting the probability at around 10 percent. "A reversal of this decision would require a sea-change in UK public opinion and UK politics before the process has become irreversible," it said. Of course, as the government has so aptly illustrated in the last few days, no-one really knows what's going to happen. William Hill favours 2019 as the most likely date for Brexit, while putting the odds for 2020 or later (including the possibility of Brexit not happening at all) at 7/4.

Nevertheless, as the implications of hard Brexit become clear, there could well be support for a very different Brexit deal than the one being pushed for by hardline Brexiteers. While most MPs believe the referendum result should be honoured, Portes suggests a breakdown in talks, followed by negative economic consequences, could "lead to a majority in parliament to take a different approach to negotiations, based on staying in the single market and the customs union and an ongoing relationship with the EU that doesn't look too different from what we have now."

How likely is that to happen? Last night's dinner between Theresa May and Jean-Claude Juncker failed to unblock the stalemate in negotiations, with both sides taking a harder line. Should the deadlock continue, there have been warnings that a "no deal" outcome would cost the average family hundreds of pounds a year. Some on the leave side have suggested this is a ludicrously optimistic scenario, pointing to the possibility that millions of jobs could be lost. The extent to which Britain is prepared to countenance a "no deal" outcome really rests on one question: How much are we prepared to pay to "take back control"?

@mark_wilding