From grounded airlines to soaring unemployment and empty shops, the implications could be dramatic.

What does 'no deal' mean?
Just as there are a variety of different deals that could be struck between Britain and the EU, there are many ways in which Brexit talks might break down. Most assume a failure to agree the terms of divorce — the size of the financial settlement, or the role of the European court of justice — followed by a walkout by negotiators and no discussion at all on future trade arrangements.

This would mean relying instead on non-EU treaties, such as shared commitments to the World Trade Organization and the Hague convention, to govern ongoing cross-border affairs. It is possible, however, to imagine a more amicable “agreed no deal,” in which divorce talks end with a limited settlement that plans for an orderly exit but is not sufficient for the EU to allow full-scale trade negotiations at this stage.

How bad could it get?
The worry is that any breakdown among negotiators will be hard to contain. The chancellor, Philip Hammond, has warned of a “bad-tempered scenario” in which neither side acts in their own best economic interests. Many Europeans regard the dispute over money not as an early round of bargaining but as a matter of good faith. If the Brits cannot be trusted to settle their past promises, why bother striking future deals?

Walking out could therefore be treated as a legal default, with litigation in the international courts and even asset confiscation. Never mind free trade talks, such an atmosphere could make it impossible to agree a replacement for all manner of existing arrangements governing travel, immigration and customs.

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