Theresa May Says a No-Deal Brexit ‘Wouldn’t Be the End of the World.’ The Pound Says Otherwise.

August 28, 2018, 9:03 AM UTC

The U.K. can still make a success of Brexit if it tumbles out of the European Union without a deal, Prime Minister Theresa May said, striking an upbeat tone as the clock ticks down on Britain’s departure from the bloc.

Speaking to reporters on the plane as she headed to South Africa on a five-day visit to three African nations, May twice cited World Trade Organization Chief Roberto Azevedo, who told BBC radio last week that trade wasn’t going to stop if Britain and the EU failed to strike a deal. The U.K. last week published 24 documents outlining preparations for such a scenario.

The pound weakened against the dollar after May’s comments, falling as much as 0.2%.

“He said about a no-deal situation that it would not be a walk in the park, but it wouldn’t be the end of the world,” May said, referring to Azevedo. “I’ve said right from the beginning that no deal is better than a bad deal.”

As Britain’s scheduled departure from the EU on March 29 draws closer, the government is trying to show that it’s prepared for all eventualities. Last week’s papers, the first of about 80 that ministers intend to publish, advised pharmaceutical companies to stockpile medicines, exporters to prepare for more red tape and consumers to brace for higher prices on EU goods.

The government is “putting in place the preparations such that if we’re in that situation, we can make a success of it,” May said, reiterating that she still thinks Britain will be able to get a “good deal.”

Gloomy Outlook

The premier’s remarks contrast with the gloomy outlook from Chancellor of the Exchequer Philip Hammond, who in a letter last week to Nicky Morgan, the chairman of Parliament’s Treasury Select Committee, said that failure to secure a deal would cut 7.7% off projected economic output and add 80 billion pounds ($103 billion) to government borrowing by 2033.

In an implicit slap-down to the chancellor, May told reporters thrice that the figures Hammond referred to were the same ones she’d described as a “work in progress” in January.

Even as officials increasingly say an exit deal may not be finalized until at least November, May said she’s still working to get it done by October, with the U.K. exiting the bloc on March 29 as planned. Asked whether she’ll have to reach a compromise with the EU in order to secure the single-market access she seeks for goods but not services, the premier signaled there are some issues on which she won’t budge.

“There are certain things that I’ve made clear are non-negotiable,” she said. “An end to free movement is one of them.”

Asked if Britain’s immigration system will look markedly different after Brexit, she replied that “by definition it will, because free movement will end.”

May will meet with South African President Cyril Ramaphosa in Cape Town on Tuesday, before meeting her Nigerian and Kenyan counterparts in Abuja and Nairobi on Wednesday and Thursday.

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