The influential Treasury Select Committee has today launched an inquiry considering the economic impact of a "no deal" scenario after Brexit.
The committee, led by Tory MP Nicky Morgan, will consider transitional arrangements for trade between the UK and EU after Brexit, the "long-term economic relationship", as well as the "preparedness for 'no deal'".
Morgan, who called for Prime Minister Theresa May to prepare to step aside in an interview published this morning in City A.M., was a prominent supporter of the campaign to remain in the EU and has been a thorn in the government's side since being sacked from the Cabinet.
The committee will hear evidence on next Wednesday 25 October from the UK's former top diplomat in Brussels, Sir Ivan Rogers, who resigned in January while urging government to avoid "muddled thinking".
Other witnesses will include former director of the Council of the EU legal service, Sir Alan Dashwood, and Catherine Barnard, a prominent professor of EU law at the University of Cambridge. The inquiry will also accept written submissions on its website.
Morgan said: “The progress and outcome of the Brexit negotiations will have profound implications for the economy and public finances."
Prominent business leaders and economists have expressed fears about the impact of leaving the EU without providing some sort of continuity after March 2019. If no deal is reached, the UK will immediately begin trading with the EU under the terms of the World Trade Organisation (WTO).
While a small minority of economists argue that the UK could prosper under a reversion to WTO terms, which would include higher tariffs on some key exports, most believe it would cause a sharp adjustment for businesses, along with significant confusion as a new customs regime is abruptly put in place.
The preparation for the UK leaving without a deal has become a central issue in government as backbench Tory MPs have put May under massive pressure to start allocating significant resources to contingency plans.
However, chancellor Philip Hammond last week warned the UK would "definitely not" have arrangements in place on "day one" after Brexit if there is no deal, which would harm financial services in particular. He also said that he would not spend large amounts on preparations.
Morgan said: “The committee will consider the short-term risks to an orderly withdrawal, and the shape of the long-term economic relationship.
“Firms and individuals need certainty about the situation after March 2019. The priority of the inquiry, therefore, will be to consider the negotiation, design and governance of transitional arrangements.”