he scene is set for a showdown, and the future of the UK economy is at stake. Will Britain secure a free trade deal with the EU? Or will the prime minister choose to sail into uncharted waters, not only stepping outside the single market and customs union, as the UK will be even under a deal, but adding the tariffs and border checks that come with a no-deal Brexit? Armed with a determination to end the transition period on 31 December, Boris Johnson is poised to force British businesses to sell their goods and services across the EU without any of the benefits that a deal offers, and with only a few days’ notice. Here we assess the impact on some of the worst-hit industries of securing a deal – albeit a slimmed-down one – compared with the alternative. Manufacturing Deal The manufacturing sector is praying for a deal so it can avoid the extra paperwork and tariffs that would follow the UK’s departure without an agreement. Car parts and aircraft components cross the Channel many times before they are assembled to become the finished article. An agreement would eliminate import taxes, or tariffs, and allow firms to maintain their current supply chains. No deal Nissan is among many manufacturers to say that they have “no plan B” should the UK become separated from the EU’s single market. The car industry expects prices to rise for consumers once 10% tariffs are imposed. Over the longer term, being cut off from manufacturers based in the EU will limit investment in the UK, especially in new industries such as electric cars. Co-operation across Europe in the aerospace industry, which has fed off the Airbus plants spread across the UK, Germany, France and Spain, is also likely to be damaged. Phillip Inman Pharmaceuticals Deal The UK will no longer align with EU regulations on medicines, whether there is a deal or not. Pharmaceuticals companies such as AstraZeneca and GlaxoSmithKline have prepared for this by setting up parallel batch-testing labs on the continent, but this will delay the supply of medicines by four to six weeks, the Association of the British Pharmaceutical Industry has warned. It is pushing for a mutual recognition agreement, which means the UK and the EU recognise each other’s standards, removing the need for duplicate testing. The UK has such agreements with several countries and they are often signed outside trade deals. New medicines will still have to be approved by separate regulators in the UK and the EU. No deal Drugmakers have been boosting their stockpiles of medicines to ensure there are no shortages, and are storing them closer to patients in the UK and Europe. Under World Trade Organization rules, there will be no tariffs on medicines, but like other goods they will be subject to border checks. The government wrote to medicine suppliers in August to warn of “significant disruption” for six months between Dover and Calais, but pharma firms plan to use alternative routes to transport medicines. Each month, 45 million packs of medicines move from the UK to the EU, and 37 million travel the other way. Julia Kollewe Education and research Deal From September 2021, EU students will no longer pay the same tuition fees as UK students, and fees could more than double. They will also lose access to UK student loans and will have to apply for student visas if they stay more than six months, and pay a hefty health surcharge to use the NHS. British students wanting to study in EU countries may also face higher fees and can only stay 90 out of 180 days without a visa (except in Ireland, which keeps free movement with the UK). The UK may continue to participate in the Erasmus exchange programme on a time-limited basis. British researchers and universities could still have access to the EU’s €80bn (£73bn) science funding programme, Horizon Europe, though there have been warnings that Britain may end up putting in more than it gets out, given that its share of EU research funding has fallen by nearly a third since 2015. No deal The UK loses access to Horizon Europe and Erasmus, but could negotiate membership later. The government has vowed to make up for the loss of funding, and to introduce a replacement for Erasmus. Julia Kollewe Financial services and banking Deal Thousands of Britons living in the EU will have their bank accounts closed at the end of the transition period – with or without a deal – since the UK will lose the “passporting” rights that allow EU-member banking firms to serve customers across the bloc. Financial services are largely outside current trade negotiations. Nonetheless, a deal could encourage EU regulators to grant “equivalence” to the UK, which would give similar access rights to financial firms after Brexit. Likewise, a deal could end lingering concerns that the derivatives trading market will be disrupted, since Brussels has not granted permission to trading platforms in London to continue serving clients in the EU after 31 December. No deal Most investment banks have been preparing for a worst-case scenario since the 2016 referendum, and have spent the past four years making sure they have obtained the right licences and redrawn client contracts to continue serving EU customers after Brexit. Some firms are still finalising certain moves, which were planned regardless of whether a deal was reached. The major Wall Street lender JP Morgan is set to shift about 200 UK staff to the EU before the end of the year, and a further 100 in 2021. Other banks, such as Morgan Stanley and NatWest, are also expected to move dozens of employees over the coming weeks. Morgan Stanley is also preparing to transfer another $120bn (£109bn) in assets to Germany in the first quarter, once sufficient EU clients have started routing their business through its continental offices, as stipulated in their post-Brexit contracts. Kalyeena Makortoff Ports and trade Deal Britain’s ports are already struggling to handle the 10,000 lorries that cross the Channel every day as they ready themselves for new customs, security and veterinary checks that are scheduled to happen under a deal. There is every prospect that the situation will worsen as those firms that have hoped for the best come a cropper. But ministers expect that initial teething problems will soon settle down. No deal Johnson has made it clear he believes businesses will find their way to new markets in South America, Africa and east Asia, boosting trade and keeping Britain’s ports busy. The chancellor, Rishi Sunak, also plans to convert more of the UK’s ports into tax-free zones, in an attempt to attract foreign operators to dock in the UK. But exiting the single market without a deal will increase the level of bureaucracy with our major trading partner. Under a no-deal scenario, around 250 million pieces of paperwork will be needed in a year, and completing them will require 50,000 customs agents – roughly six times as many as there are now. Phillip Inman Travel and airlines Deal Many tourists are going to have a harder time even with an agreement: no European Health Insurance Card, higher insurance premiums, more expensive calls, and no pets on holiday. An EU holiday might be a slightly harder sell for tour firms, once Covid allows. Airlines have long been set for any eventualities, but a deal could ease issues over whether UK licences or certification will be recognised. No deal With the UK treated as a third country from 31 December, coronavirus restrictions may well bar Britons from holidaying in the EU until the pandemic ends, unless the likes of Spain go it alone and grant an exemption. Contingency proposals should allow flights to continue between the UK and EU – and avoid planes being grounded by regulators – for at least six months, but UK airlines will no longer have the right to fly planes between bases in the EU. The main affected carrier, easyJet, has covered itself by incorporating a new company in Austria. Gwyn Topham Transport and haulage Deal Under any form of Brexit, haulage and logistics firms will have a mountain of new paperwork from 1 January. After decades of moving goods freely across the Channel, lorry drivers will be subject to customs checks for exports. Only certain imports will be checked at the end of the transition period, with the UK government having tried to ease the pain by introducing controls in stages over six months. No deal The paperwork arising from extra tariffs is expected to rocket, while travel delays will lengthen queues on motorways. UK haulage firms will also require ECMT international road haulage permits to operate trucks in Europe, with limited rights of entry, making it less viable for many. The EU has proposed a six-month grace period as a no-deal contingency but the same rush for scant permits could come around in June. Immediate blockages around Kent ports may be averted by lorry parks and inland custom posts – and by companies refusing to send consignments until the new border systems are shown to be working. Gwyn Topham Food Deal A big sigh of relief. The relationship with the EU is key to the price of food in UK supermarkets because nearly a third of the food we eat comes from the bloc. In winter, the situation is more acute because, with British produce out of season, 90% of lettuces, 80% of tomatoes and 70% of soft fruit is sourced from, or via, the EU. There would be new checks on goods at the border, but the Armageddon scenario of food rotting in lorries queuing at the ports would be avoided. No deal The big fear associated with no deal is the triggering of tariffs on the truckloads of food that flow into the country from Europe. The British Retail Consortium describes tariffs as a “bombshell” that would add more than £3bn to the UK’s collective shopping bill, pushing up the price of staples such as beef, cheese and salads. Last week John Allan, the chairman of Tesco, spelled out what no deal would mean for shoppers – temporary shortages of some fresh food and higher prices. And then there are the concerns about the readiness of the ports, particularly Dover, to cope with the headache created by the new bureaucracy associated with tariffs. Zoe Wood