If we do leave with no FTA, then the UK and EU will revert to trading under World Trade Organisation rules, which is no disaster.
Most trade in the world is under such arrangements and standard WTO tariffs are generally low and falling.
The UK trades using WTO rules with the US, our single biggest country trading partner. Britain’s non-EU trade, largely under WTO rules, has grown fast in recent years, already forms the majority of our trade and generates a large surplus.
Our EU trade share has, at the same time, shrank – and such trade has long been in deficit. That’s despite the much-vaunted “single market”, under which many of our service exports are, in practice, blocked.
Some thought this corona crisis would have provoked a UK transition extension. But while “No Deal” once looked scary, the post-Covid shift toward “supply chain security” means global trade will anyway be reconfigured. Additional cross-Channel customs procedures can now be part of a worldwide system of additional corona-related checks. Plus, taking back state aid powers now may prove invaluable as the UK thinks about how to reconstruct its economy.
It was never likely Johnson would opt for a longer transition period. That would have broken his December 2019 manifesto commitment. An extension would also have seen Britain incur more than £15bn gross annual EU payments, while remaining on the hook to help rescue eurozone members which seem, once again, on the verge of financial crisis.
The Prime Minister wants an EU trade deal, but not badly enough to accept anything like Barnier’s conditions. And the September deadline is real, not least as any FTA will need ratification by the European Parliament and countless EU regional assemblies which could pull stunts. Never underestimate the determination of Belgium’s tiny Walloon Assembly to hold an entire continent to ransom.